The Shyam Metalics & Energy stock is in focus after the company’s investor and analyst day last week highlighted the growth roadmap for FY31 and expansion plans.
The company is targeting a revenue CAGR of about 18% over FY26-FY31 to ₹42,500 crore and an Ebitda CAGR of 22% to ₹6,200 crore, while keeping its balance sheet in good health.
“Future capital allocation will remain focused on downstream and value-added products, including stainless steel, CRM/coated products, aluminum downstream products, specialty steel and railway wagons,” said a JM Financial Institutional Securities report on 17 June. The contribution of value-added products is expected to rise over the next few years.
Capex cycle
To aid growth, Shyam Metalics has an ongoing capex of around ₹16,100 crore, wherein most projects are expected to be commissioned by FY29. Out of this, capex of ₹8,630 crore has already been incurred as on FY26-end. In the Q4FY26 earnings call, Shyam Metalics announced ₹2,700 crore in new capex for increasing VAP mix in carbon steel and expansion of downstream facilities in stainless steel.
Its management intends to fund a large portion of spending via internal accruals. Nuvama Research estimates Shyam Metalics could maintain a net debt-to-Ebitda ratio of around 0.3x in FY28 despite the ongoing capex cycle, indicating sufficient balance-sheet flexibility to pursue the expansion.
A key project is the addition of 1.6 million tonnes per annum of hot-rolled coil capacity, which could strengthen downstream integration and lower dependence on external suppliers. The company also highlighted the commissioning of the CRM complex at Jamuria and a blast furnace at Kharagpur, strengthening its integrated manufacturing capabilities.
New businesses
Among newer businesses, stainless steel is expected to play a larger role in the future. The management expects stainless steel revenue and Ebitda growth at 55% and 70% CAGRs, respectively, over FY26-FY31, with the share in overall revenue rising from 7% to 28%. Aluminium is another focus area where the company is expanding into foil stock and battery foil, products that are largely imported into India.
Nuvama maintains its ‘Hold’ rating on the stock, which is now trading at around ₹955, and has raised its target price to ₹1,014 from ₹884. The broking firm has factored in 24% Ebitda CAGR over FY26-28, led by capacity expansion and ramp-up. Hereon, investors are likely to focus on execution and the pace at which the company scales newer businesses.