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First Steel manufacturing company we have presented at darkhorsestocks.

Shyam Metalics is an Indian integrated metal manufacturing firm that specialises in long steel products and ferro alloys. In terms of installed capacity, the firm is one of India’s major producers of ferro alloys, with the ability to offer intermediate and final products across the steel value chain.


Market Price at the time of publishing this report-: 360 Rs

Market price at the time when it is suggested again – 300 Rs


We have already suggested this company earlier and we strongly feel that this company is worth exploring. Also while going through financials we felt to redo the analysis of the company and we went over two recent quarterly concalls and the key points have also been mentioned at the end of this report.



Incorporated in 2002 as Shyam DRI Power Limited in Kolkata, West Bengal,India company changed its name to Shyam Metalics and Energy Limited in 2010.

Shyam Metalics is a significant integrated metal producer with a steel industry in West Bengal and Odisha, with an emphasis on Long Steel Products and Ferro Alloys.

Shyam Metalics was one of the top participants in the West Bengal steel industry in Odisha in terms of pellet capacity as of March 31, 2020, and the fourth largest player in the Sponge Iron industry in India in terms of sponge iron industry capacity (Source: CRISIL Report).

The company has three production units in India, one in Odisha and two in West Bengal. As of December 31, 2021, the total installed metal capacity of its production units is 11.6 MTPA (comprising intermediate and final products).

Manufacturing Facilities

Companyโ€™s Sambalpur manufacturing unit serves clients in India’s southern and western areas, whilst our Jamuria and Mangalpur manufacturing facilities serve customers in India’s northern and eastern regions.

Shyam Metalics operates two “Ore to Metal” integrated (forward and backward) steel manufacturing plants, one in Sambalpur, Odisha, and the other in Jamuria, West Bengal, both of which include captive railway sidings, captive power plants, iron pellet, sponge iron, billet, TMT, wire rod, and structural mills, and Ferro alloy plants.

At addition, the company maintains a manufacturing complex in Mangalpur, West Bengal, which includes sponge iron and ferro alloy factories, as well as a captive power plant.

What distinguishes the company is its integrated manufacturing plants, which are fungible by design, insulating it from price volatility and allowing it to quickly adapt to changing market conditions, as well as shift its production and product offerings to meet continuously changing market demands, resulting in optimised operating margins.

Business Products

Shyam Metalics primarily manufactures long steel products such as iron pellets, sponge iron, steel billets, TMT and structural goods, and Ferro alloys, with a particular emphasis on high margin items such as bespoke billets and specialist Ferro alloys for unique steel applications.


Pellets are agglomerated iron ore fines that can be used as a replacement for lump ore in the manufacture of sponge iron and hot metal in blast furnaces.

Shyam Metalics can create varied grades/quality of pellets because to its rotating kiln, which heats and fires the pellets consistently. These pallets are utilised as raw materials in completed goods. Aside from that, the firm also offers iron pellets, which are an intermediary product.

Sponge Iron

Sponge iron is a spongy mass of iron that is a metallic product formed in the solid state by direct reduction of iron ore/iron pellet. It is a scrap replacement that is mostly utilised in the secondary route of steel production.

India is the world’s largest producer of sponge iron, which is created through direct reduction of iron ore / iron pellet in the solid form.

Because higher grade domestic lumpy ore will be depleted in the next ten years, value additions to Iron Ore Fines through various processes such as pelletisation are required in the current context and will be economically beneficial in the long term.

Sponge iron is an intermediate product sold by Shyam Metalics.


A billet is usually cast with a rectangular or square cross section that is suitable for subsequent processing. Billets are a raw material used in the production of TMT and structural goods.

Aside from employing goods as input for its final products, the firm also distributes billets, including customised billets, as an intermediary product both locally and internationally, including Nepal and Bangladesh.

TMT Bars

TMT bars are the backbone of new constructions.

Shyam Metalics provides Thermo-Mechanically Treated bars that are harder on the outside and soft on the inside thanks to innovative technology. Wire rods, structural goods (Beams, Channels, Angles), and TMT bars are used in the construction of buildings, industrial sheds, transmission towers, dams, roadways, and other structures.

Key Characteristics of the TMT Bars include

  • Solid Grip on RCC
  • Resistance to Fire & Corrosion
  • Resistant to Earthquake
  • Weldability

The TMT and structural goods of the firm are sold under the “SEL” brand, for which the corporation has chosen Salman Khan for braiding and sponsorships. Shyam Metalics, according to the management, is one of the top TMT brands among the other seven steel businesses registered in India.

SEL Structurals

Structural steel describes hot rolled steel products such as angles, channels and beams. An integral part of infrastructure building, they give shape and strength to buildings, bridges, transmission line towers, industrial sheds and other structures. 

Company not only make structural of standard dimensions, but also customised products for specific applications, economically and quickly.

It includes Angles, Beams/Joists & Channels.

Wire Rod

Shyam Metalics has established up Wire Rod production & Wire Drawing facilities (HB Wire) at Sambalpur & Jamuria, West Bengal to manufacture high quality Wire Rods of various diameters in order to push forward integration of the company’s goods.

Because the raw materials, such as Power, Sponge, Pellet, Ferro, Steel Billets/Blooms, are created in-house at the firm’s factory, the business is able to produce high quality Wire Rod & H.B. Wire in an efficient and cost effective manner.

Binding wire, G.l wire, barbed wire for fence, armoured sealed wire for large electrical cables, nut bolts, nails, screws, and Alpine are some of the uses for these items. Ropes made of wire. Wire mesh, for example.

Power Plant

Company currently has installed capacity of 357 MW which is used for internal purpose thereby providing company an edge compared to its competitors as well as improved margins. Almost 90% of the power demand is met by these captive power plants set up by the company.

Ferro Alloys

Ferro alloys are iron alloys that have a high proportion of one or more additional elements, such as manganese, aluminium, or silicon. They are employed in the manufacture of steels and alloys.

Our ferro alloys are utilised as raw materials in the production of stainless steel goods. In addition, the company provides specialised ferro alloys โ€“ low and medium carbon โ€“ for particular steel applications.

In addition to selling ferro alloys in the United States, the firm sells them to nations such as South Korea, Indonesia, Thailand, Taiwan, Japan, New Zealand, and the United Kingdom.

On a non-exclusive basis, the company also converts manganese ore and chrome ore to silico manganese and ferro chrome for an Indian steel conglomerate.

Aluminum Foils

SHYAM METALICS is setting up Aluminium Foil Rolling mill complex to manufacture Quality Products with an annual rolling capacity of 40000 MT per annum with a product mix to cater the requirement of the market related to Pharmaceuticals, House hold Foil, Contraceptive, FMCG etc

Aluminium Foil making plant of 40,000 Tonnes per annum has also been commissioned by the company recently.

In addition, the company is expanding its product line by entering the pig iron, ductile iron pipes as well.


Consolidated financials for Q3FY22

  • Net Sales stood at Rs 2,577.82 crore in December 2021 up 51.67% from Rs. 1,699.57 crore in December 2020.
  • Quarterly Net Profit stood at Rs. 421.49 crore in December 2021 up 95.32% from Rs. 215.79 crore in December 2020.
  • EBITDA stood at Rs. 641.52 crore in December 2021 up 77.01% from Rs. 362.41 crore in December 2020.
  • Shyam Metalics EPS had increased to Rs. 16.54 in December 2021 from Rs. 9.24 in December 2020
  • As of Dec 2021 Shyam Metalics was a very low leverage company with net cash of 926 crores on its balance sheet as of 31st December 2021. 

On a nine-month basis, company has almost doubled its revenue and tripled its profits .

Consolidated financials for Q3FY22

Net Sales at Rs 3,223.20 crore in June 2022 up 30.76% from Rs. 2,465.03 crore in June 2021.

Quarterly Net Profit at Rs. 414.85 crore in June 2022 down 9.42% from Rs. 458.01 crore in June 2021.

EBITDA stands at Rs. 628.53 crore in June 2022 down 9.62% from Rs. 695.41 crore in June 2021.

Shyam Metalics EPS has decreased to Rs. 16.22 in June 2022 from Rs. 19.43 in June 2021.

As far as net debt is Company has total treasury of Rs.1200 Crores and its debt is Rs.534 Crores.

Q1 FY2023 marks the fifth consecutive quarter since listing in which company has declared a dividend and company aims to continue to reward its shareholders for their un-wavering support to the business.


Management had put out development ambitions at the IPO, with a targeted expenditure of Rs. 3,000 Crores through internal accrual spread over four years. As of the conclusion of the nine months ending December 31st, the firm had used Rs. 1,363 Crores of the allocated money and achieved substantial progress in expanding its capacity. Further more company had spend 145 crore in the month of January and February 2022 on Capex.

The company recently stated that it has taken another step in its effort to boost capacity and ramp up production by announcing a new round of CAPEX of 990 crores. The projects would be implemented as brownfield expansions on existing land at the various factories. Based on improved production capacity and anticipated development, the Captive Railway Sidings will witness the construction of two extra lines at both Jamuria and Sambalpur, doubling rake handling capacity. The proposed project extension represents a 25% increase above the 11.6 MTPA aggregate (including intermediates and pellet) capacity estimated in the IPO. Following the present announcement, aggregate capacity will be raised to 14.5 MTPA. The increased capex will be entirely covered by internal accruals.

Despite the large capital investment and massive scale of the projects, the payback period for each of these projects is exceptionally short, ranging from 2.5 to 3 years. According to management, this is because the firm has its own engineering specialists, project management professionals, and so on, and as a consequence, they are able to keep this period incredibly short.

Global Outlook

The geopolitical environment and war between Russia and Ukraine have resulted in significant changes and a direct impact on the steel and metal industries.

Despite the fact that Russian steel output continues, the EU’s unwillingness to purchase Russian steel will create an opportunity for Indian steel companies. Production in Ukraine has also been impacted. As a result, from the company’s perspective, management is noticing increased demand for its alloy goods as well as pallets. Normally, the company’s export turnover has been up to 20%, and this figure is projected to rise in the following months. 

Despite an increase in queries from multinational firms, the company has yet to clinch a substantial deal, according to management.

Managements Comments

According to management, CAPEX as a percentage of your cash flow from operations on a steady-state basis is typically approximately 60%.

According to the management, in terms of IRR, whatever projects they accept, they ensure that they would generate more than 17 to 18 percent.

In order to satisfy its coal demand, the company has links and buys at spot link auctions from Coal India. As a consequence, Shyam Metalics was able to provide improved results even in the most difficult circumstance, where the EBITDA margin was exceptionally decent.

The increase in raw material costs had no impact on Shyam Metalics since demand was high and the firm was able to pass on the price increase to its clients.

According to the management, one of the primary advantages of the firm is its position, as it is located directly next to the coal India plant and has direct links to OMC, Odisha Mining Corporation, which is one of the greatest resources in the country.

Currently, more than 70% of the pellets produced by the firm are used inside, and any future expansion will be consumed internally as well. As a result, the company’s new CAPEX pellet facility has assisted it in establishing a foothold in the pellet industry.

Shyam Metalics likewise has an ESG board and is continuously analysing what it can do on the ESG front to reduce carbon in the present space.

The promoters currently own 88 percent of the shares. According to the SEBI, the corporation is obligated to lower the same to less than 75%. However, the corporation still has two years to comply with those standards.

Additional Management’s comments as of Q1FY23

  • Aluminum product has immediately gained traction and recorded 1577 tons of volume in the first operational quarter.
  • Company has re-invested 70% of its total cash generation back into the business, retained 20% as a liquidity surplus and returned 10% to its esteemed stakeholders as a dividend
  • Currently, company is investing and expanding pallet capacity coke oven plant an additional lines of railway siding in this quarter, has incurred Rs.349 Crores in that capital expenditure.
  • If we look at the major pears the companies who have declared the results, the sales volume is down anywhere between 20 to 25% quarter-on- quarter while in case of shyam metalics rolled products plus pellets the sales volume has actually gone up by around 4-4.5%.
  • Shyam Metalics as a company that has very near to the market, majorly 80% of the product what it sells is within the vicinity of 500 kilometers. In this sector in the long product and there has never been a very big slowdown in the rural sector, company has been able to penetrate and with the enhancing of its brand values as management has mentioned in the steel they are focusing too much on the branding having Salman Khan and getting into the penetration of the rural which has really helped the company a lot.
  • Management wishes to focus more on B2C business and expects a minimum growth of 7-8% in that category.
  • Company is setting up the glass furnace which will be a backward integration for its existing plant Coke oven batteries are coming up, company is adding pellet plant.
  • In the third quarter, the steel melding, the Billet facilities, the long product facility what company has done now and also has a plan like other projects what it has declared that DRI, the sponge iron capacity will in fourth quarter will be commissioned and another three-lakh ton capacity will be added. All these things are under process and slowly, slowly whenever company commissions the plant we can see the results in that quarter.
  • As of now company has a total capacity of 8.04 million ton is the running capacity which comprising of 2.4 million ton is Billet and 3.6-million-ton pellets, 1.3-million-ton sponge GRI, 0.9 million ton of Billets, 0.9 million ton of TMT, 0.2-million-ton Ferro alloys and 267 megawatt of captive power plant.


Shyam Metalics, an Indian integrated metal production enterprise specialising in long steel products and ferro alloys, is a very low leverage company with a balance sheet of net cash of 926 crores as of December 31, 2021. In terms of installed capacity, the company is one of India’s largest producers of ferro alloys, able to provide intermediate and final products across the steel value chain. Furthermore, management has lately laid out ambitious plans for carrying out 1000 crores of Capex in the next year, with a payback period of 2.5-3 years and an internal IRR of about 20%. Thus, Shyam Metalics is worth studying in the long run based on the aggressive approach implemented by the management.

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