Shyam Metalics IPO

IPO Details:

Price Band: 303-306

Cutoff Price: 306

About Company:

Shyam Metalics is leading integrated metal producing company based in India with a focus on long steel products and ferro alloys. They are amongst the largest producers of ferro alloys in terms of installed capacity in India, as of February 2021. They have the ability to sell intermediate and final products across the steel value chain. As of March 31, 2020, the company is one of the leading players in terms of pellet capacity and the fourth largest player in the sponge iron industry in terms of sponge iron capacity in India. They were also one of the leading integrated steel and ferro alloys producers in the eastern region of India in terms of long steel products, as of March 31, 2020. Shyam Metalics have a consistent track record of delivering operating profitability, and since the commencement of our operations in Fiscal 2005, we have delivered a positive EBITDA in each of the Fiscals.

Competitive Strengths:

1. Integrated operations across the steel value chain;

2. Strategically located manufacturing plants supported by robust infrastructure resulting in cost and time efficiencies;

3. Diversified products mix with strong focus on value-added products, such as, ferro alloys, association with reputed customers and robust distribution network;

4. Strong financial performance and credit ratings.

Strategies:

1. Continue to increase our manufacturing capacities;

2. Introduce new products by leveraging our forward integration capabilities;

3. Continue to maintain low leverage with healthy capitalisation metrics;

4. Continue to focus on cost efficiency and increase profitability and market share;

5. Focus on exports.

Financial Performance:

Company revenue, net profit and EPS is positive, but it's very volatile. If EPS of Q4 is projected, then PE at the current price would be 11.75. If we consider this with sectorial PE, then it is fairly valued at current price.

Objects of the Issue:

The Net Proceeds from the Issue are proposed to be utilised in the following manner:

1. Fresh Issue

2. Offer for Sale

Our view: GMP of the stock is decent and also the stock is fairly valued. We can expect this IPO to list at premium and hence I would be applying for this IPO.

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