Shyam Metalics and Energy Limited — Q1 FY26 earnings call

Call held 23 Jul 2025

Management summary

Shyam Metalics delivered a robust Q1 FY26, with strong revenue and volume growth driven by operational efficiencies and ramp-up of new units. The company maintained healthy margins despite market challenges and continued progress on its CAPEX plans, with significant investments already incurred and capitalized. While geopolitical uncertainties and monsoon effects pose some near-term pressures, the long-term growth strategy remains on track.

Highlights

  • Revenue grew close to 22% year-on-year to ₹4,490 crores.

  • Operating EBITDA rose to an impressive 19% year-on-year, reaching ₹580 crores.

  • Volume growth was particularly notable with a 32% year-on-year increase.

  • Pig iron plant recorded a utilization rate of 104% (operating at >120% presently), and color-coated unit reached close to 70%.

  • Profit after tax increased by 5.3% year-on-year to ₹291 crores.

Concerns

  • Geopolitical crisis and US tariff uncertainty negatively impacted the market scenario.

  • Monsoon season is expected to bring some challenges and teething issues for new setups.

  • Anticipated 'little bit of pressure' on the pricing side for Q2 FY26.

  • Some challenges observed in the ductile business, leading to project hold.

Key financials

  1. Operating Revenue ₹4,490 Cr +22.4%YoY
  2. Operating EBITDA ₹580 Cr +19%YoY
  3. Operating EBITDA Margin 13.1%
  4. Profit After Tax ₹291 Cr +5.3%YoY
  5. PAT Margin 6.6%

What they filed

Q1 FY27: revenue up 23.4%, net profit up 20.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,634 3,756 4,139 4,419 4,467 +23%4,421 +18%5,240 +27%5,455 +23%
EBITDA409 456 515 580 539 +32%487 +7%727 +41%765 +32%
Net profit216 197 220 291 260 +20%198 +1%312 +42%351 +21%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

low confidence
Management discussed sales targets and capacity ramp-ups for stainless steel wire and other products, but did not provide a quantified order book value.

Source: Inferred

Capital allocation

high confidence
  • Capex ₹419 Cr this quarter · ₹10,000 Cr (total planned) planned from our internal accrual and from cash generated from our operations
    • Total CAPEX incurred ₹7,003 Cr
    • CAPEX capitalized ₹4,900 Cr
    • Remaining CAPEX to be spent over next two years ₹3,485 Cr
    At Shyam Metalics, we remain firmly committed to executing our growth and roadmap. As Q1 FY '26, we have incurred up to Rs. 7,003 crores in capital expenditure, representing 70% of our total planned CAPEX. Of this, close to Rs. 4,900 crores have been capitalized. Our announced investments are progressing well and we anticipate timely completion. ... In this quarter, we spent Rs. 419 crores, and the remaining Rs. 3,485 crores shall be spent over the next two years from our internal accrual and from cash generated from our operations.
  • Debt Debt disclosed
    I think you have to appreciate one thing, the only company in the metal sector which is kind of a debt free, which doesn't have any interest carrying forward...
  • Dividend ₹1.8/share (interim)
    As mentioned by our CMD sir earlier, the company has declared an interim dividend of Rs. 1.8 per share, amounting to an outgo of Rs. 52.24 crores, which is pursuant to our disciplined capital allocation policy.
  • Liquidity Liquidity disclosed Company retains 20% of cash generated as a liquidity surplus.
    Under this policy, we remain invested with 70% of our cash generated back into the business, retain 20% as a liquidity surplus, and return 10% to our esteemed shareholders on account of dividends.

Guidance & targets

Growth

  • Annual CAGR Growth · annual · High confidence close to 15%
    By consistently executing strategic projects and optimizing efficiency, we are well in position to maintain our annual CAGR of close to 15%.

    — Brij Bhushan Agarwal

  • Aluminum business growth Growth · next couple of years · Medium confidence more than 250%
    So, we expect that this aluminum business in the next couple of years should at least grow by more than 250% what we are doing today.

    — Brij Bhushan Agarwal

Capacity

  • Carbon Steel CAPEX operational Capacity · FY '26 · High confidence operational
    most of our carbon steel CAPEX is expected to become operational by FY '26

    — Brij Bhushan Agarwal

  • Stainless Steel and Aluminum projects commissioning Capacity · FY '27 · High confidence commissioning
    stainless steel and aluminum projects on track for commissioning in the year FY '27

    — Brij Bhushan Agarwal

  • Pig iron production Capacity · this year · High confidence 800,000 tons
    We will be able to produce at 120% like the capacity of the blast furnace what we have installed, and I am sharing we will be able to do close to 800,000 tons this year.

    — Brij Bhushan Agarwal

  • Pig iron production (optimized) Capacity · next six months · Medium confidence 2,900 tons/day
    But we are pretty sure we will be able to touch it to 2,900 tons.

    — Brij Bhushan Agarwal

Revenue

  • Stainless steel top line Revenue · next two to three years · Medium confidence ₹5,500 - ₹6,000 crores
    we started with close to around Rs. 1,200 -1,500 crores top line in the first year and now we are targeting of more than Rs. 5,500 -6,000 crores in next two to three years.

    — Brij Bhushan Agarwal

Volume

  • Stainless steel wire sales Volume · this year · High confidence 10,000 tons
    I expect that we should be able to sell close to 10,000 tons of wire this year

    — Brij Bhushan Agarwal

  • Stainless steel wire sales Volume · next year · High confidence 20,000 tons
    we will be able to ramp up to close to 20,000 tons for next year.

    — Brij Bhushan Agarwal

Power

  • Cost of power generation Power · ongoing · High confidence less than ₹2.5 a unit
    The price at what we are generating power is less than Rs. 2.5 a unit.

    — Brij Bhushan Agarwal

Profitability

  • EBITDA Margin band Profitability · this year · Medium confidence 11-13%
    We are working between 11%, 12%, 13% EBITDA. So, I think the days -- I do not see anything will go further down. We expect that we should be able to do decent.

    — Brij Bhushan Agarwal

What to watch in Q2 FY26

Commissioning of second 90 MW Bengal captive power plant

by end of August or early September
Current Under final stage of commissioning
Target Commissioned

Why it matters

Full commissioning will enhance cost competitiveness and reduce reliance on grid power, impacting bottom line.

the second 90 megawatts of Bengal plant is under the final stage of commissioning, we expect that by end of August or early September we should be able to commission that as well.

Risks & concerns

  • Geopolitical crisis and US tariff uncertainty

    medium

    Ongoing geopolitical crisis and US President's tariff uncertainty negatively impacted the current market scenario.

    Management acknowledged

  • Monsoon season impact on new units

    low

    Monsoon season is the first for new setups, potentially bringing teething issues related to moisture and other concerns.

    Management acknowledged

  • Pricing pressure in Q2 FY26

    low

    Q2 (July-September) is generally challenging, with a 'little bit of pressure' expected on the pricing side.

    Management acknowledged

  • Challenges in ductile business

    low

    Some challenges in the ductile business led to holding a small CAPEX project, with re-evaluation ongoing.

    Management acknowledged

Q&A highlights

6 direct
Fund-raising resolutions for ₹7,500 crores Direct
As far as the fund-raising resolution, this is basically enabling resolution. ... As and when if it is required, then we can be able to go ahead, otherwise it is just like an elapse.

Analysts questioned the need for such a large fund-raising resolution (₹7,500 crores) when current CAPEX plans are smaller (₹3,500 crores remaining), and management clarified it's an enabling resolution without immediate utilization plans.

Asked by Amit Dixit, Goldman Sachs

New HR pipe product Direct
HR is just a by-product. Presently, we do not have any such plan to go into a pipe business. These are the off cut which generally generates when you buy the big HR coil.

Analyst inquired about a new HR pipe product, and management clarified it's a by-product from CR plant operations, not a new strategic entry into the pipe business.

Asked by Amit Dixit, Goldman Sachs

Utilization of new pig iron and color-coated units Direct
Presently, you can say there is not much more header on this unit presently, because I think more or less it is capitalized. And today, I am very happy to say that we are operating the pig iron facility at more than 120% rating presently. And this is something, none of the company in India is operating the capacity of the pig iron at this capacity.

Analyst sought clarity on whether new units were fully utilized, and management confirmed high utilization for pig iron (>120%) and color-coated (70%), with further scope for improvement post-monsoon.

Asked by Shaleen Kumar, UBS Securities

Status and benefits of captive power units Direct
We have commissioned the first 90 megawatts of Odisha, and the second 90 megawatts of Bengal plant is under the final stage of commissioning, we expect that by end of August or early September we should be able to commission that as well. ... So, our cost of generation is close to Rs. 2 to Rs. 2.5 a KWH.

Analyst asked for an update on captive power plants, and management detailed commissioning progress and highlighted the cost-effectiveness of their power generation.

Asked by Shaleen Kumar, UBS Securities

Entry into wagons with ₹300 crores CAPEX Direct
it's a very small unit, on the size of our company. And since we had a railway siding, we had complete infrastructure. And with such a low CAPEX, also enable us to utilize our stainless-steel plates which are going to be manufactured in our plant.

Analyst questioned the rationale for the ₹300 crores CAPEX for wagons, and management explained it as a strategic, low-CAPEX move leveraging existing infrastructure and internal stainless-steel plate production for value addition.

Asked by Devesh Lakhotia, Ikigai Asset Manager

Other sectors for future entry Direct
Not yet. We are looking for lot of things, but nothing has been decided.

Analyst probed for potential new sector entries, and management indicated they are evaluating options but have not finalized any plans beyond current projects.

Asked by Kunal Kothari, Nuvama Wealth Management

Mining opportunities (iron ore or coal) Partial
Not really. We have been allocated iron ore mines in Maharashtra, and we are opportunists. We are looking for some coal mining opportunities. ... But if we see something good on the mining side which has lot of lucrative advantages of logistic and quality and help us to more create an optimization on our operating efficiency, we might. But these are all the opportunities and nothing very concrete.

Analyst asked about mining, and management confirmed an opportunistic approach to coal mining, leveraging existing iron ore allocations, but no concrete plans yet.

Asked by Kunal Kothari, Nuvama Wealth Management

Pricing pressure and FY26 margin outlook Partial
See, this is a monsoon time and these three months are generally challenging months, starting from July, August, September. But yes, this is not going to have a major impact because we are also focusing on more and more cost reductions. It's not going to have a very big impact. But yes, this is going to be a month where a little bit of pressure will be there, this quarter, on the pricing side.

Analyst inquired about pricing pressure and margin outlook, and management acknowledged near-term pressure due to monsoon but expressed confidence in maintaining EBITDA margins within the 11-13% range for the year.

Asked by Rakesh Roy, Boring AMC

2 min read 6 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Shyam Metalics reported a robust Q1 FY26, with operating revenue growing close to 22% year-on-year to ₹4,490 crores. Operating EBITDA increased by an impressive 19% year-on-year to ₹580 crores, resulting in an EBITDA margin of 13.12%. Profit after tax also saw a 5.3% year-on-year increase, reaching ₹291 crores, with a PAT margin of 6.6%.

Operational Excellence and Capacity Utilization

The company demonstrated strong operational performance, with the pig iron plant achieving over 120% utilization, significantly higher than the guaranteed capacity. The newly commissioned color-coated unit reached close to 70% utilization, indicating healthy ramp-up. Management highlighted that their fuel consumption for pig iron production is very competitive compared to peers, attributing it to best technologies and R&D efforts.

Strategic Investments and CAPEX Progress

Shyam Metalics has incurred ₹7,003 crores in capital expenditure, representing 70% of its total planned CAPEX of ₹10,000 crores, with ₹4,900 crores already capitalized. In Q1 FY26, ₹419 crores were spent, and the remaining ₹3,485 crores are planned for the next two years, funded by internal accruals. Carbon steel CAPEX is expected to be operational by FY26, while stainless steel and aluminum projects are on track for commissioning in FY27.

Product Diversification and Value-Added Portfolio

The company continues to focus on integration, diversification, and expanding its value-added portfolio. The aluminum segment is performing strongly, with plans to expand its presence and develop niche products for special applications. The stainless steel wire segment is ramping up, targeting sales of 10,000 tons this year and 20,000 tons next year, with export markets already initiated. The entry into wagons is a strategic move to utilize stainless steel plates and add value.

Capital Allocation Philosophy and Shareholder Returns

Shyam Metalics adheres to a disciplined capital allocation policy, investing 70% of cash generated back into the business, retaining 20% as liquidity surplus, and returning 10% to shareholders. The company declared an interim dividend of ₹1.8 per share, totaling ₹52.24 crores. Management emphasized being a debt-free company with no interest-carrying debt.

Outlook and Industry Landscape

Despite geopolitical uncertainties and a dynamic industry landscape, the company expects to maintain an annual CAGR of close to 15%. While Q2 FY26 may see some pricing pressure due to monsoon, management is confident in maintaining EBITDA margins in the 11-13% range. Strong demand recovery is anticipated from government policy announcements in infrastructure and housing, driving demand for steel and stainless steel.

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