Shyam Metalics and Energy Limited — Q3 FY26 earnings call

Call held 27 Jan 2026

Management summary

Shyam Metalics reported a resilient Q3 FY26 with operating revenue growing 17.7% YoY to ₹4,421 crores, driven by a 25% volume increase. The company commissioned a 0.45 million tons blast furnace and approved a new capital investment of ₹6,660 crores for future growth and value-added products. Despite a challenging global environment and margin pressures from lower realizations in some segments, the company remains optimistic about domestic demand and future growth, with several key projects slated for commissioning in the coming quarters.

Highlights

  • Operating Revenue grew 17.7% YoY to ₹4,421 crores in Q3 FY26, driven by a 25% YoY volume increase.

  • 9 Months FY26 Consolidated Revenue reached ₹13,312 crores, a 20.9% YoY growth.

  • Board approved a fresh capital investment of ₹6,660 crores for capacity expansion and value-added products.

  • Successfully commissioned 0.45 million tons blast furnace at Kharagpur, significantly increasing steelmaking capacity.

  • Strong volume growth across key segments: iron pellets up 43%, specialty alloys up 18.7%, and stainless steel up 8.8% YoY.

Concerns

  • Q3 FY26 Operating EBITDA margin at 11% was impacted by lower realization in carbon steel and sponge iron.

  • Global demand remains subdued due to ongoing geopolitical uncertainties and fluctuations in raw material prices.

  • Trade-related actions and tariff measures in key markets led to pricing pressures and increased volatility in global steel prices.

  • Near-term demand in certain retail and secondary segments remains cautious, contributing to selective pricing pressure.

Key financials

2 periods

Q3 FY26

  • Operating Revenue
    ₹4,421 Cr
    YoY +17.7%
  • Operating EBITDA
    ₹487 Cr
    YoY +6.9%
  • Operating EBITDA Margin
    11%
  • PAT
    ₹198 Cr
    YoY 0%
  • PAT Margin
    4.5%

9M FY26

  • Consolidated Revenue
    ₹13,312 Cr
    YoY +20.9%
  • Consolidated EBITDA
    ₹1,781 Cr
    YoY +16.6%
  • Consolidated EBITDA Margin
    12.2%
  • PAT
    ₹749 Cr
    YoY +8.6%

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.

Segment breakdown

SegmentVolume Growth (Q3 FY26)Realization Improvement (Q3 FY26)
Iron Pellets43%5.4%
Specialty Alloys18.7%—
Stainless Steel8.8%11.3%
Aluminum—8.5%

Capital allocation

high confidence
  • Capex ₹500 Cr this quarter · ₹14,660 Cr (next 3 years) planned New plan — Board approved fresh capital investment · Primarily internal accruals and borrowing if required
    • Capacity expansion, process improvement, downstream and value-added products (new plan) ₹6,660 Cr
    • Remaining capex from previous plan (general expansion) ₹8,000 Cr
    Additionally, the Board had approved the fresh capital investment of INR 6,660 crores to support the next phase of our growth. This investment will be used for capacity expansion, improving the processes and developing more downstream and value-added products. The proposed capex will be funded primarily through the internal accruals and borrowing if required. ... The remaining capex is around INR8,000 crores, which will be incurred in the next 3 year This quarter -- last quarter, we will be trying we will be incurring around INR500 crores.
  • Debt Debt disclosed
    The proposed capex will be funded primarily through the internal accruals and borrowing if required. ... We have to be always the least or no leverage company, I would say. ... Your low leverage is actually leading to a kind of low return on equity for the shareholder because since you are a AA+ kind of a borrower, the debt levels in a metal company are normally much higher we see everywhere.

Guidance & targets

Volume

  • Volume Growth Volume · FY26 & FY27 · High confidence 20-25%
    We are seeing like this year, we are expecting that we should be having a growth of close to 20% over the next year minimum, 20% - 25% last year. Coming year as well, we are projecting that we should be maintaining the same growth what we are doing now.

    — Brij Bhushan Agarwal

  • Long-term Volume Growth Volume · next 4-5 years · High confidence 15-20%
    And we expect that we should be growing at least close to 15% to 20% year-on-year for next 4, 5 years, minimum.

    — Brij Bhushan Agarwal

Profitability

  • EBITDA Margin Improvement Profitability · Q4 FY26 and coming quarter · Medium confidence 10-20% improvement
    So we expect that at least, if I'm not mistaken, if my finance people support me close to 10% to 15% or maybe 20%, we will see more improvement on our margins and all in this quarter and also subsequently in the coming quarter.

    — Brij Bhushan Agarwal

Capacity

  • 90 MW Captive Power Plant Commissioning Capacity · Q4 FY26 · High confidence Commissioned
    Further, I'm happy to announce that in the last quarter of FY '26, the 90 megawatt of captive power plant and 0.15 million tons of color-coated plant are expected to be commissioned with their prospective impact in the cash flow and become clearly visible for FY '27.

    — Brij Bhushan Agarwal

  • 0.15 Million Tons Color-Coated Plant Commissioning Capacity · Q4 FY26 · High confidence Commissioned

    — Brij Bhushan Agarwal

  • Aluminum Flat Product Backward Integration (0.06 MTPA) & Caster Mill Commissioning Capacity · June 2026 · High confidence Commissioned
    Additionally, the backward integration of aluminum flat product of 0.6 -- 0.06 million tons per annum with aluminum caster mill, the new foil plant capacity of 20,000 tons per annum to be commissioned by June 2026.

    — Brij Bhushan Agarwal

  • New Foil Plant Capacity (20,000 TPA) Commissioning Capacity · June 2026 · High confidence Commissioned

    — Brij Bhushan Agarwal

  • HR Coil Plant Commissioning Capacity · 2-2.5 years (FY28/FY29) · High confidence Commissioned
    No, no, not by FY '27. It will be -- because HR is coming in 2 - 2.5 years, if you see what we declared.

    — Brij Bhushan Agarwal

  • Stainless Steel Flat Rolled Product (Odisha) Commissioning Capacity · End of next year (FY27) · High confidence Commissioned
    And from the new project, which is coming up in Odisha, it's a huge project. It's not we are talking of 0.5 million more than 0.5 million flat rolled product where world-class, where we have our own alloy, we have our own power, we have our own steel. We expect that by end of next year, we should be able to commission the plant.

    — Brij Bhushan Agarwal

Regulatory

  • Stainless Steel PLI Benefits Realization Regulatory · 1.5 years (mid-FY28) · High confidence Realization of benefits
    The plant is under the construction stage. And once you are commissioning the plant, then only you will be getting. So we have -these are all statutory compliances, which are in place. So we will not get immediate results until we commission the plant. So we have to wait for another 1.5.

    — Brij Bhushan Agarwal

What to watch in Q4 FY26

90 MW Captive Power Plant Commissioning

next quarter (Q4 FY26)
Current Expected in Q4 FY26
Target Commercial operations

Why it matters

This commissioning will enhance energy self-sufficiency and reduce operating costs, impacting profitability.

Further, I'm happy to announce that in the last quarter of FY '26, the 90 megawatt of captive power plant and 0.15 million tons of color-coated plant are expected to be commissioned with their prospective impact in the cash flow and become clearly visible for FY '27.

Risks & concerns

  • Subdued Global Demand

    medium

    Global demand remains subdued due to geopolitical uncertainties and raw material price fluctuations.

    Management acknowledged

  • Trade-Related Actions and Pricing Pressures

    medium

    Steel industry impacted by tariff measures and diversification into alternative markets, causing pricing pressures and volatility.

    Management acknowledged

  • Cautious Domestic Demand in Retail/Secondary Segments

    medium

    Near-term demand in certain retail and secondary segments remains cautious, leading to selective pricing pressure.

    Management acknowledged

  • Coking Coal Price Volatility

    medium

    Coking coal prices are very volatile, though the company's own coke oven plant helps mitigate some impact.

    Management acknowledged

  • Aluminum Realization Impact from External Factors

    low

    Some impact on aluminum realization due to forex fluctuations, imports, or slowdown in the American market, but not majorly affected.

    Management downplayed

Q&A highlights

6 direct
Strategic rationale for new wagon business Direct
So it is a very small investment. And if you see the railway demand which is going to come up in the near time, we are seeing the infrastructure is growing. And I feel this is the area where we should start with very small. It's a very small capex.

Clarifies the company's entry into a new segment, highlighting low capex, synergy with existing infrastructure, and value-added product integration.

Asked by Amit Dixit

Focus on stainless steel in product portfolio Direct
And stainless steel is also one of the value addition over the carbon steel. Since we make specialty alloy, we have our own power, we have our own steel, we are focusing more on the 200 and 400 grade stainless steel where we have a neck and we should be able to capitalize more on the value addition. So stainless steel is a kind of a value addition in our existing metal space.

Confirms strategic shift towards higher-margin, value-added stainless steel products, leveraging internal capabilities and market potential.

Asked by Amit Dixit

Aluminum segment realization decline despite rising international prices Partial
One thing is, you know, we are not the primary manufacturer of aluminum. We are the value-added manufacturing hub of aluminum. And in aluminum, there are a lot of sections, a lot of products where we have a high EBITDA, and there is a lot of products where the EBITDA is a little lower, but the productivity is higher. ... But yes, due to some forex fluctuations, maybe some imports are there for the foil or maybe some kind of a slowdown in the American market, some impacts are there, but it's not majorly affected.

Explains the discrepancy in aluminum realization, attributing it to product mix, value-added focus, and external factors rather than a fundamental issue.

Asked by Vikas Singh

Impact of safeguard duty on steel prices and demand Direct
Safeguard duty has been introduced. There is a decent price increase from this month onwards from January onwards. Last quarter, the price was extremely low. ... But overall, as a country demand is concerned, we are utilizing our plant at more than 90% - 95% capacity, irrespective of some little bit of price pressure, but we are able to sell the material.

Provides insight into the positive impact of regulatory measures on domestic steel prices and confirms strong capacity utilization despite market pressures.

Asked by Vikas Singh

Strategy for intermediate products and downstream integration Direct
So we will not be completely zero downing the intermediate and neither we want to zero down. We want to have some little bit of share to have a proper penetration and awareness on the market side. And every intermediate product also, what we sell, we sell in the profit margins and also. But yes, in the time to come in next couple of years, we'll see that, you know, we'll be converting a lot of our intermediate product by ramping up our existing capacity and adding more value downstream.

Clarifies the company's balanced approach to intermediate products, aiming for downstream integration while maintaining market presence.

Asked by Mudit Bhandari

Details and cost of the new HR Coil Plant Direct
No, no, nothing, only steel melting shop and HR, Ashish. Only steel melting shop and HR. ... We cannot set up any hot rolling mill at INR 2,600 crores. ... for 1 million-ton, steelmaking facilities, you need a $1 billion, which is around close to INR 8,000 crores to INR 9,000 crores approximately.

Provides specific technical details about the HR coil plant (SMS+HR, CSP) and clarifies the cost expectations, contrasting with analyst's lower figures.

Asked by Ashish Kejriwal

Expected EBITDA range post capex completion Partial
We are seeing like this year, we are expecting that we should be having a growth of close to 20% over the next year minimum, 20% - 25% last year. ... And if the top line is improving on the volume growth of the additional capacities and putting more downstream and all, we'll see the percentage of EBITDA will also improve with the revenue and all.

Management provides qualitative guidance on EBITDA improvement linked to volume growth and product mix, but avoids specific numerical ranges for future quarters.

Asked by Rajesh Majumdar

Low leverage and its impact on Return on Equity (ROE) Direct
We are always conservative. After 3 years, Rajesh, you can't tell us that we are very we want to be very firm on our see whatever promises we have done in the last 3 years on the growth side and all when we set we did an IPO 3.5 years before with a top line of INR 6,000 crores and EBITDA of INR 600 crores, we are talking of this year more than 3x. ... We are prudent. It is better if we are prudent and we are more conservative.

Highlights the company's conservative capital allocation philosophy, prioritizing prudence and sustainability over maximizing ROE through higher leverage.

Asked by Rajesh Majumdar

2 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Shyam Metalics reported a robust Q3 FY26 with operating revenue reaching ₹4,421 crores, marking a 17.7% year-on-year growth. This performance was primarily driven by a significant 25% year-on-year increase in sales volume. Operating EBITDA stood at ₹487 crores, growing 6.9% YoY, with an operating EBITDA margin of 11%. Profit After Tax (PAT) for the quarter was ₹198 crores, remaining broadly stable YoY, with a PAT margin of 4.5%.

9 Months FY26 Consolidated Performance

For the nine months ended December 31, 2025, the company achieved a consolidated revenue of ₹13,312 crores, representing a strong 20.9% year-on-year growth. Consolidated EBITDA for this period was ₹1,781 crores, up 16.6% YoY, with an EBITDA margin of 12.2%. The Profit After Tax for the nine months was ₹749 crores, showing an 8.6% growth over the previous year, highlighting solid overall financial health.

Strategic Capex and Expansion Plans

The Board has approved a fresh capital investment of ₹6,660 crores for capacity expansion, process improvement, and developing more downstream and value-added products. This is in addition to the remaining ₹8,000 crores from a previous capex plan, to be incurred over the next three years. The company successfully commissioned a 0.45 million tons blast furnace at its Kharagpur plant in Q3 FY26. Key upcoming projects include a 90 MW captive power plant and a 0.15 million tons color-coated plant expected in Q4 FY26, and aluminum backward integration and a new foil plant by June 2026.

Product Portfolio Diversification and Value Addition

Shyam Metalics is actively diversifying its product portfolio, with iron pellets volume increasing by 43% YoY, specialty alloys volume by 18.7% YoY, and stainless steel volume by 8.8% YoY in Q3 FY26. Realizations also improved for iron pellets (5.4% YoY), aluminum (8.5% YoY), and stainless steel (11.3% YoY). The company is strategically focusing on value-added products like stainless steel (200/400 grade) and is exploring a new wagon manufacturing business with a low capex of ₹200 crores, leveraging existing infrastructure and backward integration.

Industry Outlook and Market Conditions

While the global steel industry faces challenges from subdued demand, geopolitical uncertainties, and trade-related actions, the domestic market remains stable with strong fundamentals. Infrastructure development, manufacturing, and urbanization continue to drive demand for long products. The company is operating at 90-95% capacity and expects a decent price increase from January onwards due to the introduction of safeguard duties on steel imports, which is supportive for domestic manufacturers.

Capital Allocation Philosophy and Future Growth

The company maintains a conservative and prudent capital allocation approach, primarily funding its capex through internal accruals, with borrowing only if required. Management emphasized its commitment to being a low-leverage company, prioritizing sustainable growth and long-term value creation over aggressive debt-fueled expansion. They project a volume growth of 20-25% for FY26 and FY27, and 15-20% for the next 4-5 years, driven by new capacities and value-added product mix.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls