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ICICI Securities Report
Shyam Metalics and Energy Ltd.'s Q3 FY24 performance was ahead of our estimates. Key points:
Higher volume, cost efficiencies and refined product mix drove performance.
Ebitda margin expanded 190 basis points QoQ to 12.8% despite little price support.
198 ktpa sponge iron-ore plant commissioned and merger of Mittal Corp completed.
Net debt fell slightly QoQ at Rs 2.35 billion.
Going ahead, we are positive on management's focus on enhancing downstream exposure in various product categories.
Taking cognizance of increasing downstream presence, which will likely result in progressively better return of equity, we raise our target enterprise value/Ebitda to 6.5 times (earlier 6 times) resulting in a revised target price of Rs 840 (earlier Rs 780) on FY26E Ebitda. Maintain 'Buy'.
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