Shyam Metalics - Volume Growth Offsets The Price Weakness: ICICI Securities

ICICI Securities Report

Shyam Metalics and Energy Ltd. reported firm operating performance in February 2024. Key points:

1. Volume grew across major products month-on-month despite less number of working days;

2. Realisation declined (month-on-month) for all the products except aluminium foil; and

3. Implied revenue was down only 1.4% month-on-month as higher volume mitigated the impact of lower prices.

Going ahead, we expect Shyam Metalics to gain from capacity ramp-up of steel and value-added products. Besides, the lower coal price is also expected to sustain the Ebitda margin in the range of 12-13%. Taking cognisance of lower pellet sales volume and prevailing prices, we lower our FY24E/FY25E Ebitda by 5%/10%. As a result, our revised target price works out to Rs 815 (earlier Rs 840). We maintain Buy.

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