Buy This Metal Stock For 92.57% Gain Despite Dip In Stock Price: ICICI Direct

ICICI Direct, a prominent brokerage house, has a 'buy' rating on Shyam Metalics and Energy, although the stock has plunged by 18.25% since its listing in June 2021. The stock-broking firm believes that the small-cap company has a good volume realisation and the recent monthly numbers further add to the conviction. The brokerage feels that the stock price can grow further up to 92.57% in the future.

Shyam Metalics and Energy is a small cap company incorporated in 2002. It is a metal producing company, headquartered in Kolkata, West Bengal. The company produces long-product structural steel, ferroalloys, pellets and sponge iron. It has a market capitalisation of Rs 8,123.04 crore.

Here are the key points why ICICI Securities has maintained a 'buy' call on Shyam Metalics and Energy:

1. Rebar volume rose despite overall weak demand

2. The volume ramp-up of aluminium foils and LC ferrochrome may aid margins

3. The implied revenue for May'23 is up 2% YoY despite sharply lower realisation across all product lines

4. The company's operating performance in May'23 stayed stable largely on the back of volume growth despite lower realization.

View & Rating

"Going ahead, we expect earnings growth largely on the back of capacity ramp-up. On the profitability front, we expect MoM decline in May'23 owing to lower realisation across all product lines except ferrochrome," ICICI Direct stated in its research note.

"We expect lower thermal coal and iron ore costs to aid profitability in Q2FY24. Hence, we do not envisage a risk to our FY24E EBITDA of Rs25.6bn (up 73% YoY). We maintain BUY on Shyam Metalics and Energy with an unchanged target price of Rs 570 per share on 4.5x FY25E EBITDA," it added.

Stock Price Movement

The latest stock price of the company is marginally up by 0.75% to Rs 318 per share on an intraday basis. In the last one year, the share price has declined by 1.17% while since its listing, it has plunged steeply by 18.25%.

Disclaimer

The stock has been picked up from the brokerage report of ICICI Direct. Greynium Information Technologies, the author or the brokerage firm will not be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.