Shyam Metalics

Shyam Metalics reported strong financial results for Q4 FY26, with revenue from operations reaching INR 5,240 crores, a 27% year-on-year increase, and Profit After Tax (PAT) growing 42% year-on-year to INR 312 crores. For the full fiscal year 2026, the company achieved an annual turnover of INR 18,552 crores, up 22% from the previous year, and a PAT of INR 1,061 crores, marking a 17% growth. Basic EPS for FY26 stood at INR 38.1 per share, compared to INR 32.7 in FY25.

The company demonstrated substantial volume growth, with overall sales volume increasing by 26% year-on-year for FY26 to 4.94 million tonnes, and 22% in Q4 FY26. Key volume drivers in Q4 included a ~200% year-on-year surge in CR coil volume to 50,344 tonnes and pig iron volume to 2,03,499 tonnes, alongside a 40% increase in iron pellet volume. Realizations also saw healthy improvements, with aluminum realization up 16% year-on-year to INR 4,07,461 per tonne and stainless steel realization improving ~17% year-on-year.

Shyam Metalics announced a new capital expenditure of INR 2,700 crores aimed at expanding its presence in value-added and specialty steel segments. This includes INR 900 crores for a new 8 lakh tonnes long and specialty wire/bar mill at Kharagpur, targeting commissioning by March 31, 2029. Additionally, INR 1,800 crores is allocated for a 6 million tonnes stainless steel expansion and downstream facility at Sambalpur, also targeting March 2029. The total capex requirement is estimated at INR 10,000 crores, with INR 3,000 crores planned for FY27, primarily funded through internal accruals.

Q4 FY26 EBITDA margin improved to 14.4% from 13.8% in the prior year, driven by disciplined cost management, improved realization, and a favorable shift towards higher value-added segments. However, the full-year FY26 EBITDA margin saw a slight contraction to 13.7% from 13.8% in FY25, primarily due to input cost pressures, restatement of imports, and currency fluctuations. Management expects future stainless steel EBITDA to be 20-30% higher than carbon steel due to its niche market and forward integration.

The company significantly improved its working capital management, reducing working capital days from 22 days to 9 days. Inventory days increased from 99 days to 123 days due to strategic positioning of raw materials for new capacities, which management expects to liquidate in Q1/Q2 FY27. Net cash generated from operating activities for FY26 was approximately INR 2,000 crores, providing robust liquidity to fund the planned capex. The company maintains a conservative debt policy, aiming not to exceed 0.5x total equity.

The successful commissioning of Phase 2 of the CRM complex at Jamuria and the blast furnace at Kharagpur contributed to the strong performance. Upcoming commissioning of the Galvalume line in the CRM complex and a new aluminum caster with foil stock and foil plant in FY27 are expected to further boost volume and value addition. Management expressed optimism about West Bengal's industrial growth and the company's ability to capitalize on it, with a target stainless steel sales run rate of INR 300 crores per month in the next three years, up from INR 130-140 crores currently.

Management addressed a Central Pollution Control Board observation, clarifying it was a minor error identified during inspection, resolved within 4-5 days, with full compliance expected within three months. An ED case on coal was also mentioned, which management downplayed as non-material and broadly applicable across the industry. Despite geopolitical conflicts, the aluminum business is 'oversold,' indicating strong demand exceeding current supply capacity.