Shyam Metalics IPO Review – Should you Subscribe?
Kolkata based Shyam Metalics IPO (Shyam Metalics and Energy IPO) would open for subscription on 14th June 2021. Shyam Metalics is leading integrated metal producer company in India. Company generated strong revenue growth in the last 3 years and 9 months. Should you invest in Shyam Metalics and Energy IPO? In this article we would provide Shyam Metalics IPO dates, IPO Price band, market lot, reasons to invest, risk factors, IPO Price valuations and final review whether one should invest or avoid.
About Shyam Metalics and Energy Limited
They are a 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. They have the ability to sell intermediate and final products across the steel value chain.
As of the end of Mar-2020, they were one of the leading players in terms of pellet capacity and the 4th 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.
They currently operate 3 manufacturing plants located at Sambalpur, Odisha, and Jamuria and Mangalpur in West Bengal.
As of the end of Dec-2020, the aggregate installed metal capacity of its manufacturing plants was 5.71 million tonne per annum (comprising of intermediate and final products). Its manufacturing plants also include captive power plants with an aggregate installed capacity of 227 MW. They are also in the process of increasing the capacities of its existing manufacturing plants and captive power plants, which is expected to increase its aggregate installed metal capacity from 5.71 MTPA to 11.60 MTPA and captive power plants aggregate installed capacity from 227 MW to 357 MW.
These proposed expansions are expected to become operational between Fiscal 2022 and Fiscal 2025. In addition, they are in the process of commissioning an aluminum foil rolling mill at Pakuria in West Bengal with a proposed installed capacity of 0.04 MTPA, which is expected to become operational in Fiscal 2022.
Shyam Metalics and Energy Limited competitive strengths
1) Leading integrated metal producer in India.
2) Strategically located manufacturing plants with a robust infrastructure.
3) Diversified product portfolio.
4) Strong financial performance and distribution network.
Shyam Metalics IPO Dates, Price Band and Issue Details
Shyam Metalics IPO would open on Monday 14th June 2021 and closes on Wednesday 16th June 2021. Shyam Metalics and Energy IPO Price band is Rs 303 to Rs 306. Here are the IPO details.
|IPO Opening Date||14-Jun-21|
|IPO Closing Date||16-Jun-21|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 10 per equity share|
|IPO Price band||Rs 303 to Rs 306 per equity share|
|Lot Size||45 Shares|
|Min Order Quantity||45 Shares|
|Listing at||BSE and NSE|
|Issue Size||Rs Rs 909 Crores
i) OFS – Rs 252 Crores
2) Fresh issue – Rs 657 Crores
Objects of the issue
Here are the objects of the IPO issue.
1) Offer for Sale for Rs 252 Crores: Under OFS, selling shareholders would sell the shares and the company would not get any proceeds from this offer.
2) Fresh Issue for Rs 657 Crores:
i) Repayment and/or pre-payment by company and its subsidiary debt fully or partially.
ii) General corporate purposes
Who are the company promoters?
Mahabir Prasad Agarwal, Brij Bhushan Agarwal, Sanjay Kumar Agarwal, Subham Capital Private Limited, Subham Buildwell Private Limited, Narantak Dealcomm Limited, Kalpataru Housefin & Trading Private Limited, Dorite Tracon Private Limited, and Toplight Mercantiles Private Limited are the promoters of the company.
Company Financial Performance
Here are the consolidated revenue and profit details in the last 3 years and 9 months (Amts in Rupee Millions)
|Year Ending||Revenues||Profits after tax||Profit %|
|9 Months ending Dec-20||39,956.3||4,563.2||11.4%|
Its EPS for FY2020 is Rs 14.57 and last 3 years average EPS is Rs 18.93. For 9 months ended Dec-20, its EPS was at Rs 19.53.
Why to invest in Shyam Metalics and Energy Limited IPO?
Here are a few reasons to invest.
1) Shyam Metalics is leading integrated metal producer company in India.
2) Company generated consistent revenue growth in the last 3 years and 9 months.
3) Company generates high margins between 11.4% to 13.5% in FY18, FY19 and 9 months ended Dec-20. However, in FY2020, its margins were at low and at 7.7%.
4) Company employees will get Rs 15 per share discount if they apply for this IPO.
Risk Factors of investing in this IPO
1) Company depends on its suppliers on delivery of some of the primary raw materials like iron ore, iron ore fines, coal, chrome ore and manganese ore. If there is any loss of such suppliers, company business would get interrupted.
2) Company success depends on reliable logistics and transportation infrastructure. If there is any disruption in such services, it might not be able to deliver products on time. This would adversely impact the operations of the company.
3) Demand and supply in Steel industry are highly volatile and sensitive to cyclical nature. Decrease in steel prices would have a material impact on the business and financial condition.
4) Covid-19 pandemic and deterioration of economic conditions has impacted several businesses including Shyam Metalics. The extent it would impact on future cannot be predicted. This can pose a risk to company business.
5) Raw materials and energy are critical to the steel industry. Any volatility in their prices could impact company profitability.
6) There could be unexpected loss, shutdown and slowdown in operations of its manufacturing plans which would have material impact and financial condition of the company.
7) Company proposes some expansion plans. In case they are unable to successfully implement such expansion plans, it can impact the financial condition of the company.
8) For complete internal and external risk factors, you can refer the RHP of the company
Shyam Metalics IPO Dates / Time Table / IPO Schedule
Shyam Metalics IPO listing (expected date) is on 24th June 2021.
|Finalization of Allotment||21-Jun-21|
|Initiation of Refunds||22-Jun-21|
|Credit to Demat Account||23-Jun-21|
|IPO Shares Listing Date||24-Jun-21|
How to apply this IPO?
You can login to your demat account, visit IPO section and click on the IPO link of Shyam Metalics and Energy Limited. You can then enter minimum lot quantity and price band and then submit.
Shyam Metalics IPO Price Valuations
This section helps you know how the issue is priced i.e., overpriced or underpriced. Shyam Metalics IPO Issue Price band is Rs 303 to Rs 306.
1) On the upper price band of Rs 306 and EPS of Rs 14.57 for FY20, the P/E ratio works out to be 21x.
2) For the last 3 years average EPS of Rs 18.93, the P/E ratio is 16x.
3) If we annualize its 9 months ended Dec-21 EPS, the P/E ratio is 12x.
4) Means, the company asking price of Rs 306 of the upper price band in the P/E range of 12x to 21x excluding FY21 valuations.
5) There are listed peers like Tata Steel which is trading at P/E 89x (Highest) and SAIL at P/E 25x (Lowest) and the industry average is 43x.
Hence, Shyam Metalics Share Price of Rs 306 (upper price band) is reasonably priced.
Shyam Metalics IPO Grey Market Premium (GMP)
GMP is nothing but the premium in the offline market. Shyam Metalics IPO grey market price is stable and hovering between Rs 131 to Rs 145 per share.
1) GMP as per Chanakya – Rs 131-136
2) GMP as per IPO Watch – Rs 140
3) GMP as per IPO Central – Rs 140
3) GMP as per Eagle Eye on Chittorgarh today – Rs 145
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Shyam Metalics and Energy Limited Credit Rating
There is no credit rating required for IPO.
Shyam Metalics and Energy IPO Review – Should you invest?
Shyam Metalics is leading integrated metal producer company in India.
Company financials indicate strong revenue growth in the last 3 years and 9 months.
Company generating consistent margins in the last 3 years and 9 months, except for FY2020 which are lower.
Shyam Metalics IPO price is reasonably priced.
Considering all these positive factors, one can invest in this IPO for medium to long term perspective.
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