Shyam Metalics delivers strong quarter, cuts FY27 growth outlook without explanation
A 23% revenue jump and 14% margin mask a 10-point growth guidance reduction and an unexplained doubling of the stainless steel forecast.
The numbers
- Revenue rose 23% to ₹5,455 cr, led by a 138% surge in pig iron volumes and a 52% jump in CR coil.
- EBITDA climbed 32% to ₹765 cr, lifting the margin to 14% from 13% a year earlier.
- PAT increased 21% to ₹351 cr.
- Debt-equity stood at 0.07, leaving ample balance-sheet room for the ₹4,500 cr expansion plan.
- Sponge iron volumes fell 34%, reflecting a deliberate mix shift toward higher-value products.
Management's story
- FY27 revenue and EBITDA growth guidance was cut from 'close to 30%' to 'more than 20%' on a stated desire for 'prudence'.
- Internal projections remain above 25%, management said, but it prefers to under-promise.
- The stainless steel run-rate forecast doubled to ₹600-700 cr monthly once a new plant hits 70-80% capacity.
- Flat-products revenue is expected to nearly double in FY27 on the color-coated ramp-up.
- The aluminium foil plant started commercial production, with management targeting a 40-50% margin improvement from this segment.
“Our own projections are higher than 25.0%, but we have been very prudent in our commitments; we prefer to share better surprises with our investors.”
— Brij Bhushan Agarwal, Chairman, on FY27 growth guidance
Where they diverge
The quarter itself was clean. The trouble is the medium-term story. Management cut FY27 growth guidance by 10 percentage points in two months, then doubled the stainless steel run-rate forecast in the same breath. The guidance cut was blamed on 'prudence', while the stainless upgrade appeared without a bridging explanation. This mismatch between a more cautious top-line outlook and a far more aggressive segment call undermines the reliability of the numbers around which the stock must be priced. The foil plant's launch is a positive catalyst, but it is 3-4 months from regularization.
The full read
Shyam Metalics posted a strong first quarter. Revenue of ₹5,455 cr jumped 23%, driven by massive volume gains in pig iron and CR coil. EBITDA expanded 32% to ₹765 cr, and the margin touched 14%. The numbers are solid and consistent. The dissonance emerged on the earnings call, where management revealed a 10-point cut to its FY27 growth guidance—from 'close to 30%' to 'more than 20%'—offering 'prudence' as the sole reason. At the same time, it doubled the long-term stainless steel run-rate forecast to ₹600-700 cr monthly without reconciling the change in assumptions. Chairman Brij Bhushan Agarwal explained the conservative guidance by stating, 'Our own projections are higher than 25.0%, but we have been very prudent in our commitments; we prefer to share better surprises with our investors.' This suggests the cut is a tactical buffer, not a fundamental problem. But the simultaneous bullish call on stainless steel muddies the message. The balance sheet, with a debt-equity ratio of just 0.07, can comfortably absorb the ₹9,580 cr remaining CapEx on an internal-accrual basis. The new aluminium foil plant is another positive, but it is months from full contribution. The quarter settled Shyam Metalics as a steady operator. It left open whether management's own numbers can be trusted for the years ahead.
What we're watching
- The aluminium foil plant's ramp-up and margin realization over the next 3-4 months.
- Whether the ₹9,580 cr CapEx program proceeds on the internal-accrual funding plan.
- Stainless steel run-rate progress toward the ₹600-700 cr monthly target.
- Execution on the ₹4,500 cr fundraise and its impact on the 0.07 debt-equity ratio.