SMEL Share Price: ICICI Securities has a ‘buy’ call on Shyam Metalics and Energy with a target price of Rs 400. The current market price of Shyam Metalics and Energy is Rs 346.40 on the NSE. The period specified by the analyst is one year when the price of Shyam Metalics and Energy Ltd. can achieve a specific goal. The stock is up 9.67 percent in five days on the NSE and 7.10 percent in the previous month. On a year-to-date (YTD) basis, the stock is up 2.14 percent, but has fallen -7.91 percent in the past 1 year.
The new listed company is a large integrated metal fabrication company based in India, specializing in long steel products and ferro-alloys, mainly in West Bengal and Odisha. “Key drivers for Shyam Metalics are mini mill configuration that allows for accurate cost control, capex optimization as some of the expensive EPC contracts can be avoided, conservative capital structure keeps the business running well through cycles and a tightly controlled cost structure and low capex intensity allow for higher return ratios through the cycle,” the brokerage note said. While high commodity costs (RM) are a significant interim risk to margins.
Investment reason:
The company’s focus on continuous efficiencies, improved productivity and cost rationalization has enabled it to deliver consistent and strong financial and operational performance. The company has relatively better financial strength compared to other companies operating in the long and intermediate steel sector, it stressed.
According to the brokerage, “Shyam Metalics and Energy Ltd (SMEL) has announced an additional capex of ~Rs9.9bn on top of the existing committed capex of ~Rs30bn over 3-4 years. The additional investments would be made to i) increase the capacity of the pellet plant by ~2.4 million tpa (~1.2 million tpa at the Jamuria and Sambalpur plants), ii) set up a coke oven plant with a capacity of ~0.45 million tons per year, and iii) double captive railway capacities.”
ICICI Securities has said: “The capex breakup amounts to i) Rs 3.6 billion for the pellet plant, ii) Rs 4.5 billion for the coke oven plant and iii) Rs 1.8 billion for rail sidings. The capex will be financed In addition, the aluminum foil plant with a capacity of ~40,000 tons per year was commissioned in March 22. The pellet plant and the coke oven plant are expected to be operational by September 23, while the sidings are expected to be operational by March 23. will be put into use.
Financial
For the quarter ended 12/31/2021, the company reported a consolidated total income of Rs 2594.37 Crore, an increase of 3.16 percent from the last quarter Total revenue of Rs 2515.02 Crore and an increase of 51 .97 percent from last year in the same quarter Total income of Rs 1707.17 Crore. The company reported net profit after tax of Rs 422.60 Crore in the last quarter.
Promoter/FII Holdings
Promoters held an 88.35 percent stake in the company as of December 31, 2021, while FIIs owned 0.98 percent and DIIs owned 2.69 percent.
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