Shyam Metalics and Energy's shares gained over 5% after reporting that its September quarter (Q2FY27) consolidated sales volume rose 26% year-on-year to 1.5 million tonnes. September was particularly strong, with volumes rising 32% y-o-y and revenue growing almost 40% to over ₹2,000 crore. The Q2 volume growth marks a significant improvement versus 8% y-o-y growth in Q1, with blended realization increasing by about 7% in Q2, though some benefits are likely offset by higher coking coal prices. Revenue growth for H1FY27 now stands at 29% compared with the management's guidance of 20% growth for FY27, with Q1 EBITDA having risen by 32% to ₹765 crore, as against the company's 20% growth guidance for FY27.
The integrated metal producer announced a memorandum of understanding with the Maharashtra government on Monday to set up a 9 million tonne per annum (mtpa) integrated steel plant in Chandrapur, entailing an investment of ₹50,000 crore. This major expansion aligns with the company's broader capex plans, as it is undertaking projects entailing capital expenditure of about ₹14,000 crore and has already spent ₹3,300 crore. The company's capacity will increase to 14.6 mtpa across various categories of steel, intermediates and aluminium products by FY31, from the current 9 mtpa. Captive renewable power generation is expected to help lower energy costs, with the company targeting a 600-700 basis point increase in return-on-equity under its Vision 2031 from about 10% in FY26.
Global brokerage UBS has raised its target price on Shyam Metalics and Energy to ₹1,550, implying a 45% upside from the stock's closing price of ₹1,067.3 as of October 7. According to reports from The Financial Express, UBS has maintained its 'Buy' rating on the stock and increased the target price by 24%, citing the company's new capital expenditure plans and increasing focus on value-added products. The brokerage believes the company stands out in disciplined capital allocation, superior project execution, and efficient operations. As per UBS, their review of completed and upcoming projects indicates that Shyam delivers capex at lower cost and with shorter timelines than the industry averages, supporting superior ROIC and faster growth. The stock has already gained 26% in 2026 and is on track for its fourth consecutive year of gains, with the company delivering a cumulative gain of 141% over the last five years.
UBS expects Shyam Metalics' earnings before interest, tax, depreciation, and amortisation (EBITDA) per tonne to improve to ₹8,400 by FY31 from ₹4,700 in FY26. This reflects a 24% growth on compounded annual growth rate (CAGR) basis over FY26 to FY31, compared to 12% CAGR growth between FY21 and FY26. The brokerage believes the market has not fully priced in the capex ramp-up and that consensus earnings upgrades will follow. UBS has raised its FY28 EBITDA guidance for the company by 3% and FY29 EBITDA guidance by 8%. The company's earnings profile is changing as it moves from low-value intermediates to higher realisation products, with UBS expecting the contribution from intermediates to decline from 33% of revenue in FY26 to 12% by FY31E, while stainless steel increases from 7% to 25% and finished steel from 44% to 52%.
According to UBS analysis reported by The Financial Express, Shyam Metalics' earnings profile is changing as it moves from low-value intermediates to higher realisation products. The brokerage expects the contribution from intermediates to decline from 33% of revenue in FY26 to 12% by FY31E, with stainless steel increasing from 7% to 25% and finished steel from 44% to 52%. This shift will be driven by new businesses such as hot rolled coil, cold rolling mills, special bar quality, stainless steel flat products, and railway wagons. UBS expects Shyam Metalics' EBITDA growth to materially outpace volume growth as more revenue comes from downstream and value-added products, with the company's earnings profile becoming more diversified and higher-margin focused. The company's successful foray into new products in the aluminum foil and stainless steel segments suggests timely capitalization of new projects, with UBS believing the company can better navigate commodity cycles than its peers through efficient operations and vertical integration. Shyam Metalics shares have gained 26% so far this year and are trading at an EV/EBITDA multiple of 10, based on Bloomberg consensus FY27 estimates.
