
UBS has initiated coverage on Shyam Metalics and Energy Limited (SMEL) with a “Buy” rating, setting a price target of ₹1,200, which represents a potential 60% upside from the current share price. The investment bank has expressed strong confidence in Shyam Metalics’ strategic direction and execution capabilities, citing several factors that make the company a standout in the metals and energy sector.
Shyam Metalics’ management has been commended for its pragmatic approach to moving up the value chain and diversifying its product offerings across different metals. This includes a successful foray into new business areas such as aluminum and stainless steel products. UBS believes that these initiatives showcase the company’s strong execution capabilities and position it well for future growth.
A key aspect of UBS’s positive outlook is the multiple new projects Shyam Metalics has planned, which are expected to commence operations in FY25/26. These projects are anticipated to provide strong earnings visibility, reinforcing the company’s growth prospects while also mitigating profitability risks through diversification.
UBS also highlighted that the market may be underestimating the full value of Shyam Metalics’ highly integrated operations. The company internally sources 75% of its raw materials and generates 80% of its power requirements through captive means. This level of integration not only enhances operational efficiency but also provides the company with greater control over costs, giving it a significant competitive edge.