Shyam Metalics & Energy Ltd. outlined its growth roadmap at its recent analyst meet, targeting an expansion in revenue and earnings over the next five years, prompting brokerages such as JM Financial and Jefferies to raise their price targets on the stock.
The company aims to grow revenue 2.3 times to Rs 42,647 crore by FY31, while EBITDA is projected to increase 2.7 times to Rs 6,236 crore during the same period.
For comparison, EBITDA grew 1.7 times between FY21 and FY26. Management is also targeting a return on capital employed of 22% and return on equity of 20%, while expecting the balance sheet to turn net cash positive by FY31.
Growth Drivers
A key driver of the growth strategy is the expansion into higher-margin, value-added products. Stainless steel, cold-rolled materials and aluminium businesses are expected to emerge as major growth engines, supplementing the company's traditional steel operations, as per the management.
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The company highlighted that margins should improve as its stainless steel capacity comes on stream, supported by strong backward integration. Around 75% of the raw material requirement for the stainless steel business is already integrated, while access to low-cost captive power is expected to provide an additional competitive advantage.
Shyam Metalics currently meets about 81% of its power needs through captive generation, a figure that could rise to 85-86% after ongoing capex is completed. Management said this places the company among the lowest-cost energy producers in the sector.
New Growth Avenues
The company expects its aluminium foil exports business and railway-related operations to contribute meaningfully to growth over the coming years, helping diversify earnings and improve product mix.
Following the analyst meet, JM Financial reiterated its Buy rating and raised its target price to Rs 1,100 from Rs 1,050. The brokerage said the discussions reinforced management's confidence in executing its expansion plans, while value-added products are likely to drive earnings growth beyond FY26. It also noted that capital discipline and cost leadership remain central to the company's strategy.
Jefferies maintained its Buy rating and increased its target price to Rs 1,150 from Rs 1,040. The brokerage highlighted the company's target of nearly tripling EBITDA by FY31 and expects capacity additions across stainless steel, carbon steel, sponge iron and pig iron to support robust volume growth. Jefferies forecasts a 16% EBITDA CAGR over FY26-FY29, although it noted that achieving management's margin targets will depend on market spreads and the evolution of the product mix.
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