Shyam Metalics up 9%; forays into stainless steel biz with Mittal Corp buy
Shares of Shyam Metalics and Energy (SMEL) surged 9 per cent to Rs 318.55 on the BSE in Wednesday’s trade as the company forayed into the stainless steel (SS) business by acquiring Mittal Corp in a NCLT-led resolution process.
On Tuesday, SMEL, a leading integrated metal producing company based in Kolkata, announced their third acquisition of Mittal Corp with a foray into the stainless steel (SS) / wire rod & bar mill business. The matter is subjudice and shall be resolved in due course, the company said in a press release.
This inorganic growth will witness the establishment of manufacturing footprints in the state of Madhya Pradesh and add capacities of 150,000 tpa SS /wire rod & bar mill. Ferro alloys a key input material for stainless steel is extensively produced by SMEL’s existing companies.
The Government has mandated a minimum 20 per cent use of stainless steel in coastal areas which ensures a very stable demand for these products.
The Mittal Corp acquisition cost is around Rs 450 crore. The company also plans to invest around Rs 7,500 crore over the next five years to scale up its metals business.
The acquisition of Mittal Corp will help SMEL to foray into stainless steel and special products such as defence materials, etc. This inorganic growth will witness the establishment of manufacturing footprints in Madhya Pradesh and add capacities of 150,000 tonnes per annum SS/wire rod & bar mill. Also, of the fresh proposed investment of ~ Rs 7,500 crore, ~ Rs 5,000 crore will be channelised into its main West Bengal-based plant at Jamuria near Asansol. The company also has a plant in Odisha and was contemplating a beneficiation plant there to reduce cost and ensure raw material security, ICICI Securities said in a note.
Meanwhile, in the past six months, the stock price of SMEL has underperformed the market, with a12 per cent gain, as compared to 18 per cent rally in the S&P BSE Sensex. In the past one year, the was up 2 per cent, as against 10 per cent rise in the benchmark index. The stock had hit a 52-week high of Rs 385 on March 24, 2022.
Comments are closed.