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Shyam Metalics — Multi-Fold, Multi-Faceted Growth: ICICI Securities

Long–term prospects intact.

<div class="paragraphs"><p>TMT bars manufactured by Shyam Metalics And Energy Ltd. (Source: Company website)</p></div>
TMT bars manufactured by Shyam Metalics And Energy Ltd. (Source: Company website)

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ICICI Securities Report

The volume/realisation data of Shyam Metalics and Energy Ltd. for April 2023 reveals that the company has made a good start in FY24 despite price/demand headwinds, particularly in long products. Key points:

  1. Volume of metalics and semis rose as newly-commissioned facilities in December 2022/January 2023 ramped-up production;

  2. rebar volume declined 15% month-on-month to 103.4 thousand tonne owing to seasonally lower demand; and

  3. aluminium foils sales volume was down 9% month-on-month though there is an impressive ramp up YoY.

Going ahead, we expect volume growth YoY to sustain as capacities ramp up. Additionally, new rebar facility of 330 kte by June 2023 end may further boost the share of rolled products.

On profitability front, we expect an improvement in April-23 compared to even March-23 mainly driven by lower thermal coal cost- both domestic and imported and steadily declining iron ore prices.

Going ahead, while we expect realisation to decline, lower cost is likely to result in Ebitda rate of Rs 6-6.5 billion per quarter. Hence, we do not envisage a risk to our FY24E Ebitda of Rs 29 billion (up 93% YoY).

Click on the attachment to read the full report:

ICICI Securities Shyam Metalics Update.pdf
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