Global brokerage UBS has placed a bullish bet on Shyam Metalics Limited, predicting a 35 per cent upside from its previous closing price. The firm has maintained a ‘buy’ rating on the stock, setting a target price of INR 1,175 (USD 13.73) per share, compared to its last close at INR 869.3 (USD 10.16).
So, what’s driving this optimism? UBS highlights two key factors:
One is the anti-dumping duty boost. Shyam Metalics stands to benefit significantly from the Indian government’s anti-dumping duty on Chinese aluminium foil imports. As India’s second-largest aluminium foil manufacturer, the company is well-positioned to capitalise on this move.
And the other is the increased production capacity. With additional aluminium foil capacity coming online, UBS expects Shyam Metalics to generate an extra INR 125 crore (USD 14.61 million) in EBITDA over the next two years.
Along with aluminium foil that’s pushing the company forward, there is a 12 per cent safeguard duty on steel products, which is also expected to bolster EBITDA for its colour-coated sheets segment.
Strong sales performance
Shyam Metalics has been on an upward trajectory, with stainless steel sales surging 110 per cent in February, hitting 8,552 tonnes year-on-year. Realisation per tonne climbed 10 per cent to INR 1.29 lakh (USD 1,507), though sales dipped 5 per cent compared to January.
In the aluminium foil segment, the numbers also tell a growth story:
Analysts’ take
The broader market sentiment remains positive. Out of six analysts covering the stock, five recommend a ‘buy’, while one remains bearish. As of 11:45 AM on March 24, shares of Shyam Metalics were trading 0.43 per cent higher at INR 873 (USD 10.20), having already gained 17.11 per cent year-to-date.
With multiple tailwinds in play, does this make Shyam Metalics a compelling buy? Investors will be watching closely as the company rides the aluminium and steel momentum.
Information credit: CNBC TV18
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