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ICICI Securities Report
Shyam Metalics and Energy Ltd. is a sponge based long product producer (with coal linkages from Mahanadi Coal Fields Ltd./Central Coalfields Ltd., unintegrated in iron ore which the company procures from Odisha) with sponge iron capacity of ~2.11 millions tonne per annum as on March 10, 2022.
It has pellet capacity of 2.4 mtpa, with downstream billet and TMT/structural capacity of 892 kilo tonnte and ~820 kte, respectively.
Key drivers for Shyam Metalics are-
mini mill configuration allows for close cost monitoring,
capex optimisation as some of the expensive engineering, procurement and construction contracts can be avoided,
conservative capital structure holds the company in good stead through cycles and
tightly controlled cost structure and low capex intensity allow for increased return ratios through cycle. High raw material costs is a key interim risk to margins.
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