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Shares of Shyam Metalics and Energy rose by up to 3% on September 9, hitting an intraday high of Rs 818 per share. By 2:22 PM, the stock had slightly reduced gains, trading at Rs 810.9, up 2.1%. In comparison, the BSE Sensex climbed 206.39 points to reach 81,390.32. The rise in Shyam Metalics' stock price followed the company’s announcement of ambitious growth plans in its aluminium and stainless-steel segments.
In a statement, the company highlighted its strong execution capabilities and multiple new projects set to commence in FY25/26, ensuring robust earnings visibility and diversification to mitigate profitability risks. The management also reaffirmed its commitment to maintaining a maximum debt exposure of 0.5 times, ensuring sustainability across business cycles.
Additionally, they noted a cash surplus of Rs 20 billion despite peak capital expenditure cycles. Shyam Metalics operates a unique business model in the metals industry, sourcing around 80% of its power from captive plants. Its power costs of Rs 2.36/kWh are significantly lower than the average grid cost of Rs 5-6/kWh, offering substantial cost efficiencies.
The company’s 5-year growth plans include:
- Expanding the stainless-steel business from 150,000 tons to 650,000 tons, a 4.3x increase.
- Growing the aluminium segment by 1.8x, from 24,000 tons per annum to 42,000 tons per annum.
- Increasing capacity in carbon steel through new products like colour-coated sheets and ductile iron pipes by 1.8x.
- Expanding captive power capacity from 386 MW to 706 MW, a growth of 1.8x.
UBS recently initiated coverage on Shyam Metalics with a 'Buy' rating and a 12-month target price of Rs 1,200 per share, citing the company's product diversification and integrated operations as key strengths.
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INDUSTRIAL PRODUCTS FINDER (IPF) is India’s only industrial product portal. Referred to as the ‘Bible’ of the manufacturing sector in India,
INDUSTRIAL PRODUCTS FINDER (IPF) is India’s only industrial product portal. Referred to as the ‘Bible’ of the manufacturing sector in India,
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