Shyam Metalics Gets Its Most Bullish Price Target Yet As Anti-Dumping Duty Boosts Outlook

Shyam Metalics and Energy Ltd. on Monday received its most bullish price target as yet by UBS, as the brokerage firm expects India's move to impose anti-dumping duty on Chinese aluminium foil to significantly boost the company’s profitability by curbing cheaper imports and strengthening its market position.

The research firm hiked its price target to Rs 1,175 from Rs 1,150 earlier, while maintaining a ‘buy’ rating. That's the highest price target so far among the analysts tracked by Bloomberg. The price target implied a 35% upside from Monday's close.

The brokerage has increased Shyam Metalics' Ebitda estimates by 2% and 4% for the next two financial years, respectively.

Shyam Metalics stands to gain an additional Rs 1-1.25 billion in Ebitda over the next two years due to the new duty, UBS said in a note on Monday.

The research note came after India announced the anti-dumping duty on Sunday, imposing levies of up to $873 per tonne for six months on aluminium foil imports from China.

The duty aims to protect domestic manufacturers from cheap imports. Apart from aluminium foil, the government has also imposed duties on other Chinese goods, including vacuum flasks and certain chemicals, as part of broader measures to shield domestic industries.

Shyam Metalics currently has an aluminium foil production capacity of 26,400 metric tonnes annually and is in the process of expanding it by an additional 18,000 metric tonnes. UBS estimates that the company’s Ebitda per tonne for aluminium foil, currently at Rs 35,000, is likely to increase by Rs 20,000 post the anti-dumping duty. 

The company is also setting up a 60,000 metric tonne aluminium flat-rolled capacity, of which around 42,000 metric tonnes will be used internally as aluminium foil stock, a key raw material that is mostly imported.

Additionally, the recently announced 12% safeguard duty on steel products is expected to boost the company's earnings from its colour-coated sheets business, UBS says. The company plans to double its colour-coated steel capacity from 0.25 to 0.3 million tonnes by March 2026.

Shyam Metalics has been expanding aggressively as part of its five-year capex plan, having spent Rs 5900 crore until the first nine months of the financial year ending March 2025. It plans to invest an additional Rs 410 crore in the fourth quarter.

Key upcoming projects include an oxygen plant, a captive power plant, and a beneficiation unit. UBS expects these expansions, along with backward integration efforts and a growing focus on value-added products, to drive higher realisations and profitability for the company.

Shares of the company closed 0.66% lower at Rs 863.6 per share, compared to a 1.32% advance in the NSE Nifty 50. Intraday, the shares hit a high of 4.11% at Rs 95 per share.

It has risen 43.97% in the last 12 months and 18.4% on a year-to-date basis.

Five out of the six analysts tracking the steel producer have a 'buy' rating on the stock, and one suggests a 'sell', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 940.2, implying an upside of 9%.