After UBS, an international brokerage, began covering Shyam Metalics and Energy, the company’s share price increased by 10% and reached a 52-week high. Shyam Metalics and Energy has received a Buy rating from the global brokerage house, which highlights the company’s strong growth and transformational trajectory. UBS has established a target price of ₹1,200 per share, indicating a possible 43% upside.
Shyam Metalics’ stock price opened Thursday’s trading session on the BSE at ₹810 per share. It reached an intraday high of ₹844.85, as well as a low of ₹805.15. The price of the Shyam Metalics shares increased from ₹400 to ₹800 in a year.
“Shyam Metalics share price has recently formed a Higher Top Higher Bottom structure and is thus in an uptrend. The 40 DEMA at 710 is a good support for the near term. Traders can keep a buy-on-dip approach for this stock,” said Ruchit Jain, Lead Research Analyst at 5paisa.
UBS said in its analysis that the management stands out due to its pragmatic approach of progressing up the value chain, increasing product/metal variety, and integrating backwards to improve efficiency. Its capacity to carry out plans is demonstrated by its successful entry into new markets (aluminium and stainless steel products). Several forthcoming projects that will begin operations in FY25/26 will also provide clear visibility of good earnings while lowering the risk of profitability through diversity.
“We believe the market is not fully appreciating its integrated operations such as internal sourcing (75% of raw materials), captive power (80% of requirement), and the ability to venture into new businesses. We initiate coverage at Buy with a price target ₹1,200, c60% above the current share price,” the global brokerage said.
UBS stated in its study that it is quite confident about an acceleration of earnings.
According to the brokerage, the business has suggested a ₹10,000 crore capital expenditure plan for FY22–27, which will be funded by current cash and internal accruals. By distributing this capital expenditure across a range of initiatives, goods, and productivity enhancements, the profit risk associated with project delays is reduced.
“More importantly, our analysis indicates capex is both margin and ROIC-accretive. Of the planned capex, ₹5,000 crore has been incurred but only ₹2,600 crore is capitalised and the balance is in CWIP. We expect all new projects to come online by FY27 with Rs25bn to be capitalised in FY25 and the balance ₹4,900 crores in FY26 and FY27. We estimate this capex could generate additional EBITDA of ₹2,600 crore in three years resulting in EBITDA/ PBT CAGRs of 39%/50% in FY24-27,” UBS said.
Integrated metals are produced by the renowned company Shyam Metalics. In Sambalpur, Odisha, and Jamuria, West Bengal, the company operates steel production plants. It also has a manufacturing facility in West Bengal’s Mangalpur.
