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.  

(business standard)