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Home >Markets >Ipo >Shyam Metalics IPO sees strong demand: 10 things to know

The IPO of Shyam Metalics and Energy closes today. The public issue, which had opened on Monday, has seen a strong investor demand. At the end of Day 2, the issue was subscribed over 3 times, with strong demand seen from retail investors. Ahead of the public issue the steelmaker had mopped up 270 crore from anchor investors. Shyam Metalics has set a price band of 303-306 a share for its 909 crore IPO, which closes on June 16. Shyam Metalics shares were trading a premium of Rs155 in the grey market, according to market watchers.

"The IPO of Shyam Metalics strikes at a perfect time when the metal sector is enjoying a bull run. On the financial front, PE ratio based on annualised FY21 EPS comes at 12 times at the price of 306 which seems to be reasonable and leaving enough for investors. Diversified product portfolio and expansion plans should further strengthen the financials which makes this issue attractive," says Abhay Doshi, who is the founder of UnlistedArena.com, which deals in pre-IPO and unlisted shares.

Here are 10 things to know about Shyam Metalics IPO:

1) The IPO comprises fresh issuance of equity shares worth up to 657 crore and a 252 crore offer for sale by existing shareholders.

2) Post IPO, the shareholding of promoters in Shyam Metalics will fall to 88.35%, from 100%.

3) The lot size is 45 shares. KFIN Technologies is the registrar of the IPO and will manage share allocation and refund.

4) According to brokerages, the allotment of shares in Shyam Metalics IPO is likely to be finalised on June 21 and listing could happen on June 24.

5) The company intends to utilise the net proceeds from the fresh issue for repayment or prepayment of debt worth 470 crore and that of its subsidiary, Shyam SEL and Power Ltd, and for other general corporate purposes.

6) "Over the period FY18-20, net revenues of the company grew at a CAGR of 7.9% to 4,362.9 crores whereas EBITDA/PAT over the same period declined at 4.0%/10.4% to 645.6 cr/ 340.3 cr impacted by COVID-19. However, for 9MFY21 profitability has rebounded strongly with EBITDA growing to 719.4 cr (+58.9% YoY) and net profit to 456.3 cr (+75.1% YoY growth) given the firm global price trends amidst strong demand," Ventura Securities, which has a subscribe rating on the issue, said in a note.

7) ICICI Securities, JM Financial, Axis Capital, IIFL Securities and SBI Capital Markets Ltd are the book running lead managers to the issue.

8) Kolkata-based Shyam Metalics is a metal producing company based with a focus on long steel products and ferro alloys. The company has a diversified product mix such as, iron pellets, sponge iron, steel billets, TMT, structural products, wire rods, and ferro alloys. It operates three manufacturing plants, one in Odisha (Sambalpur) and two in West Bengal (Jamuria and Mangalpur).

9) The current total installed capacity is 5.71 MTPA and the company plans to ramp up capacity.

10) "At the upper price band of Rs.306, Shyam Metalics is available at EV/EBITDA of 9.1x (FY21 annualized) which appears fully priced. We assign a Subscribe rating, with a short to medium term perspective due to optimistic international prices and rise in domestic demand," says domestic brokerage Geojit.

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