Shyam Metalics IPO Review 2021: Yes! The IPOs are finally back after over a month-long wait no thanks to the Covid second wave. The Shyam Metalics and Energy Ltd. IPO opens on 14th June and closes on 17th June 2021.

In this article, we cover the Shyam Metalics and Energy Ltd IPO review and look into important IPO information to find out the possible prospects of the company.

Shyam Metalics and Energy IPO Review – About the Company

Shyam Metalics Logo | Shyam Metalics IPO Review

Founded in 2002, Shyam Metalics and Energy Limited (SMEL) is one of India’s largest producers of ferroalloys in terms of installed capacity and the fourth-largest player in the sponge iron industry.

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The Kolkata-based company’s product list includes iron pellets, sponge iron, steel billets, TMT, structural products, wire rods, and ferroalloys.

In addition to this, the company also undertakes the conversion of hot rolled coils to pipes, chrome ore to ferrochrome, and manganese ore to silicon manganese for an Indian steel conglomerate.

Metallic construction site image | Shyam Metalics IPO Review

The company manufactures these through its 3 plants in Odisha and West Bengal.

Their Sambalpur plant in Odisha and Jamuria plant in West Bengal are integrated steel manufacturing plants that produce captive railway sidings, captive power plants, iron pellet, sponge iron, Thermomechanically treated (TMT), wire rod, and structural mills among other products.

Their Mangalpur plant in West Bengal produces sponge iron and ferroalloy plants. It also includes a captive power plant. 

Shyam Metalics Total assests over the years

As of December, it had an aggregate installed capacity of 5.71 million tonnes per annum. The company has plans to increase this capacity to 11.60 NTPA by 2025 as brownfield projects in two plants of Jamuria in West Bengal and Sambalpur in Odisha.

The company also plans to further diversify its product range by producing pig iron, ductile iron pipes, and aluminum foil. 

Its captive power plants had an aggregate installed capacity of 227 MW. On the distribution front, the company has  42 distributors across 13 states and 1 union territory.

The company’s client list includes a mix of both domestic and international clients.

Domestic Clients

  • Jindal Stainless Limited
  • Rimjhim Ispat

International Clients

  • Norecom DMCC
  • Norecom Limited
  • POSCO International Corporation
  • World Metals and Alloys
  • Traxys North America LLC
  • JM Global Resources
  • Vijayshri Steel Pvt Ltd

Shyam Metalics and Energy’s Competitors

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Shyam Metalics and Energy IPO Review – Financials

Shyam Metalics's profit over the years

On the financial front, the company has managed to maintain operational profitability since 2005. Since then they have managed to achieve a positive EBITDA every year. One of the biggest concerns when it comes to steel companies is debt.

As of December 2020, its standalone debt stood at Rs. 381 crore. The debt of its subsidiary Shyam Sel and Power Ltd (SSPL) stood at Rs.398.60 crores. The consolidated debt of the company for the period stood at Rs. 886.29 crores.

Despite this, the company has long-term finance of Rs. 182 crores and working capital of Rs. 682 crore. The company’s net worth as of December 2020 stood at Rs. 3,285 crores.

Shyam Metalics and Energy IPO Review – Key IPO Information

The promoters of the company are 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.

ParticularDetails
IPO Size₹909.00 Cr
Fresh Issue₹657.00 Cr
Offer For Sale(OFS)₹252.00 Cr
Opening DateJun 14, 2021
Closing DateJun 16, 2021
Face Value₹10 per equity share
Price Band₹303 to ₹306 per equity share
Lot Size45 Shares
Minimum Lot Size1 ( Rs.13,770)
Maximum Lot Size14 ( Rs.192,780)
Listing DateJun 24, 2021

Shubham Capital, Subham Buildwell, Kalpataru Housefin & Trading, Dorite Tracon, Narantak Dealcomm, and Toplight Mercantiles will be participating in the offer for sale.

Initially, the promoters had planned an Offer for Sale (OFS) of Rs. 452 crore making it a Rs 1,107 crore IPO. The promoters however revised this and decided to offload Rs. 252 crores of their stake reducing the total IPO to Rs. 909 crores.

Analysts believe that this may have something to do with the high valuation of steel stocks this year. 

ICICI Securities, Axis Capital, IIFL Securities, JM Financial, and SBI Capital have been appointed as the lead managers to the issue. KFin Technology Pvt. Ltd. has been appointed as the registrar to the issue. 

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Purpose of Shyam Metalics and Energy IPO

  • Repayment and/or pre-payment of the company and its subsidiary (SSPL)’s debt fully or partially. According to the draft papers the company intends to use Rs. 470 crores towards this cause. 
  • General Corporate Purpose. 

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Closing Thoughts

The IPO opens on 14th June and closes on 16th June 2021. For retail investors, it can be a good opportunity to look into the company’s future prospects and apply for the IPO if they believe in the products and growth prospects of Shyam Metalics and Energy Ltd.

That’s all for this post. Do let us know what you think of the Shyam Metalics and Energy Ltd. IPO review. Are you planning to apply for this IPO or not? Comment below. Cheers!