Summary
Shyam Metalics and Energy Limited - Q3 FY 2026 Earnings Call Summary Tuesday, January 27, 2026, 4:00 PM
Event Participants
Executives 3 Brij Bhushan Agarwal (CMD), Deepak Agarwal (CFO), Pankaj Harlalka (Head of IR)
Analysts 8 Amit Dixit (Goldman Sachs), Ashish Kejriwal (Nuvama), Devesh (Ikigai Asset Manager), Kartikeya Kumar Pandey (360 One Capital), Mudit Bhandari (IIFL Capital), Rajesh Majumdar (360 One Capital), Rajiv Jain (Arcane Investments), Ruchit Agrawal (Unifi Mutual Fund)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Consolidated) | ₹4,421 crores | +17.7% YoY; driven by 25% volume growth across key segments. |
| EBITDA (Consolidated) | ₹539 crores | +6.3% YoY; 12.2% margin impacted by lower carbon steel realizations. |
| Operating EBITDA | ₹487 crores | +6.9% YoY; 11% margin supported by aluminum and stainless steel. |
| Profit After Tax (PAT) | ₹198 crores | Stable YoY; 4.5% margin maintained despite pricing headwinds. |
| Iron Pellet Volume | 43% Growth | Significant YoY increase following successful capacity ramp-ups. |
| Specialty Alloys | 18.7% Growth | Volume increase YoY; realizations remain under pressure. |
| Stainless Steel | 8.8% Growth | Volume growth YoY; realizations improved by 11.3% YoY. |
| Total Planned Capex | ₹9,425 crores | ₹8,038 crores (85%) already incurred as of 9M FY26. |
Geographic & Segment Commentary
- Aluminum: Realizations increased 8.4% YoY; the company is transitioning from foil manufacturing to full backward integration with a 0.06 MTPA cold rolling mill and new foil capacity of 20,000 TPA by June 2026.
- Stainless Steel: Realizations improved 11.3% YoY; focus is on 200 and 400 series grades leveraging captive power and alloys, with a new 0.5 MTPA flat-rolled project in Odisha expected by end of FY27.
- Carbon Steel & Intermediates: Facing pricing pressure in sponge iron and carbon steel; however, 0.45 MTPA blast furnace at Kharagpur recently commissioned to support long-term steelmaking ambitions.
Company-Specific & Strategic Commentary
- New Growth Phase: The Board approved a fresh capital investment of ₹6,660 crores for capacity expansion and downstream value-added products, funded via internal accruals.
- Flat Products Expansion: Setting up a 1.6 MTPA HR Coil plant at the Jamuria (Bengal) site to consume captive intermediate products (Pig Iron/DRI) and target specialized thinner sections.
- Wagon Manufacturing: Strategic entry into wagon fabrication (₹200 crore capex) using captive steel and existing railway siding infrastructure to service growing infrastructure demand.
- Energy Efficiency: Focus on captive power (90 MW plant commissioning in Q4 FY26) using waste heat/gases to maintain low cost of production and shield from fuel price volatility.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth | 15% - 20% CAGR | Multi-year target driven by new capacity commissioning and downstream integration. |
| Q4 FY26 Margins | +10% to 20% Improvement | Anticipated QoQ margin expansion due to post-safeguard duty price hikes and construction season demand. |
| Capex Outlay | ₹1,500 - ₹1,800 Cr/Year | Annual spending planned for the next 3 years to execute the ₹8,000 crore remaining project pipeline. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical & Trade | Management noted global steel flows are being altered by US tariffs, creating regional pricing volatility and domestic pressure from diverted imports. |
| Raw Material Volatility | Coking coal remains volatile; while captive coke ovens provide a hedge, fluctuations impact the cost structure of primary steelmaking. |
| Realization Pressure | Despite steady demand, incremental domestic capacity industry-wide keeps realizations under check, particularly in secondary/retail segments. |
Q&A Highlights
Business Strategy & HR Coil
- Question: What is the rationale for the HR Coil plant and how will it be configured? (Ashish Kejriwal)
- Answer: It will be a 1.6 MTPA facility using CSP (Compact Strip Production) technology to produce thin slabs with no reheating, ensuring zero compromise on quality (Brij Bhushan Agarwal).
Capital Allocation & Leverage
- Question: Why maintain such low leverage (AA+ rating) when ROE is below 13%? (Rajesh Majumdar)
- Answer: The company prioritizes being a “least or no leverage” firm to remain resilient through cycles; growth of 20-25% CAGR has been achieved while remaining conservative (Brij Bhushan Agarwal).
Wagon Segment Rationale
- Question: Why enter the wagon industry which seems unrelated? (Amit Dixit)
- Answer: It requires low capex (₹200 Cr) and utilizes captive steel and existing railway siding; it serves as a forward integration for the upcoming flat product/HR coil business (Brij Bhushan Agarwal).
Safeguard Duties & Pricing
- Question: What is the impact of the newly imposed safeguard duties? (Vikas Singh)
- Answer: It has enabled a decent price increase starting January 2026, addressing unfair import pressure and improving domestic pricing discipline (Brij Bhushan Agarwal).
Key Takeaway
Shyam Metalics delivered a resilient Q3 FY26, characterized by an 18% revenue increase and 25% volume growth despite a testing global pricing environment. The company successfully commissioned its 0.45 MTPA blast furnace at Kharagpur and announced a massive ₹6,660 crore Phase II expansion plan, highlighting a transition toward high-margin downstream products like HR coils, stainless steel flats, and aluminum foils. Management remains committed to a low-leverage, integrated model, targeting a 15-20% volume CAGR over the next five years. With safeguard duties supporting domestic realizations and significant captive power capacity coming online in Q4, the company is positioned for margin expansion in FY27. Successful execution of the large-scale HR Coil and stainless expansion projects remains the primary watch point for investors.
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