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Shyam Metalics and Energy Limited IPO opens on 14th June 2021 amounting to Rs 909 crore. The offer comprises fresh issue of Rs 657 crore and an offer for sale of Rs 252 crore.
Shyam Metalics posted total revenue of Rs 3995.63 crore for nine months ending 31st Dec 2020. The Issuer earned PAT of Rs 456.32 crore for the same corresponding period. The total revenues reduced by 6.17% to Rs 4395.30 in FY20 as against Rs 4684.56 crore for FY19. PAT reduced by 44% to Rs 340.34 crore for FY20 from Rs 604.13 crore for FY19. The decrease in PAT was mainly due to an increase in interest cost in FY20 and the purchase of stock in trade.
The financial performance in fiscal 20 has fallen slightly due to lower turnover and higher provisions for interest and depreciation owing to the expansion of installed capacities in FY20, according to the management.
Debt to equity is 0.51 in FY 20 which increased from 0.32 in the last two years. The Issuer’s borrowings increased to Rs 1330.5 crore in FY 20 from Rs 722.11 crore in FY19. Return on net worth is 12.04% for FY 20.
Title | 9 months FY 20-21 | FY20 | FY19 | FY18 |
Total Revenue | 3995.63 | 4395.3 | 4684.56 | 3920.4 |
PAT | 456.32 | 340.34 | 604.13 | 424.37 |
EBITDA | 782.07 | 677.99 | 1022.91 | 781.3 |
Total Assets | 10515 | 5,203.79 | 4,052.43 | 3,470.63 |
EBITDA Margin | 19.57% | 15.43% | 21.84% | 19.93% |
Net Margin | 11.42% | 7.74% | 12.90% | 10.82% |
Debt to equity | 0.29 | 0.51 | 0.32 | 0.32 |
Return on Net Worth | 13.89% | 12.04% | 24.27% | 22.89% |
At NAV of 140.63 as on 30th Dec 2020, P/BV is 2.18 at upper price band of Rs 306 per share. With EPS of 19.53 for 9 months ending 31st Dec 20, equivalent P/E is 11.75 as compared to peer average P/E of 14, hence the issue appears to be fully priced.
Tata Steel, JSW Steel, SAIL, Jindal steel are shown as the peers of the Issuer in the RHP though they are not directly comparable in terms of volumes of business. Peer details are shown in the table.
Particulars | Tata Steel | JSW Steel | SAIL | Jindal Steel | Tata Steel Long Products | Shyam Metalics |
Face Value per share | 10 | 1 | 10 | 1 | 10 | 10 |
Total Income for FY20 | 141660.1 | 141660.1 | 62570.0 | 36943.7 | 3571.3 | 3571.3 |
Basic EPS | 11.86 | 16.78 | 5.13 | -1.08 | -142.81 | 14.57 |
NAV per share | 640.52 | 150.41 | 100.58 | 310.62 | 452.16 | 120.97 |
Return on net worth | 1.54% | 10.87% | 5.11% | -1.28% | -25.59% | 12.04% |
P/E | 16.56 | 21.32 | 15.46 | 11.16 | 7.26 | - |
Shyam Metalics is a leading integrated metal producing company based in India with a focus on long steel products and ferroalloys. The Issuer has a decent financial performance over the three years and 9 months ending Dec 20. The Issuer also intends to expand its manufacturing capacities and has growth plans for the future. Steel has good demand from sectors like infrastructure, oil and gas, and auto which is also a positive. Hence, investors might consider investing in the long term.
Review By CA Priyanka Choudhary on 12th Apr 2021
About CA Priyanka Choudhary
Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.
Email: [email protected]
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