Shyam Metalics and Energy Limited (SMEL) is focusing on moving up the value chain by diversifying into new metals and enhancing its product offerings. The company has successfully expanded into aluminium and stainless-steel products, positioning itself as a multi-metal company. This move is expected to strengthen earnings while mitigating the risks of fluctuating profitability.
SMEL’s management has adopted a disciplined approach to capital allocation, ensuring strong financial health. The company maintains a debt policy limiting its exposure to 0.5X, ensuring long-term sustainability. Despite being in the middle of its capital expenditure (CAPEX) cycle, SMEL remains cash positive with a cash surplus of ₹2,000 crores as of now. The company has also received a CRISIL AA credit rating, reflecting its strong financial standing.
In recent years, SMEL has expanded its production capacity significantly, particularly in value-added products. Over the past five years, revenue from value-added products has grown at a compound annual growth rate (CAGR) of 43.2%. Finished steel volumes also saw a sharp rise, growing at a CAGR of 40%, and revenue contributions from aluminium and stainless steel reached 4% and 4.5%, respectively, in FY24.
SMEL has outlined a robust CAPEX plan of ₹10,025 crores, with ₹4,948 crores already spent as of Q1 FY25. The remaining ₹5,077 crores will be spent over the next three fiscal years, with the company expecting to capitalize ₹2,500 crores in FY25, ₹2,000 crores in FY26, and ₹2,871 crores in FY27. These investments are aimed at driving the company’s growth and solidifying its position in the multi-metal industry.
SMEL’s commitment to efficiency is evident in its power cost management, sourcing 80% of its power needs from captive plants at a lower rate of ₹2.36/kWh compared to the market average of ₹5-6/kWh. This gives the company a competitive edge in cost efficiency.
With a focus on high-growth metals like aluminium and stainless steel, SMEL is well-positioned to capitalize on future demand while continuing to grow its carbon steel and specialty alloys businesses.
In the last five years, SMEL’s revenue has grown from ₹4,376 crores in FY20 to ₹13,195 crores in FY24, marking a threefold increase, while EBITDA has grown from ₹634 crores to ₹1,569 crores over the same period.
