Shyam Metalics & Energy To Sell Shares At Rs 303-306 Apiece In IPO
Shyam Metalics & Energy Ltd. will sell shares at Rs 303-306 apiece through an initial public offering next week as the steelmaker looks to pare debt.
The Rs 909-crore maiden offer, opening on June 14, will comprise a fresh issue worth Rs 657 crore and an offer-for-sale of up to Rs 252 crore, according to its red herring prospectus. The IPO will close on June 16.
The integrated steelmaker, with a focus on long steel products and ferro alloys, plans to use the proceeds from the fresh issue to reduce debt by Rs 450 crore in the form of lowering working capital.
The company had received the market regulator’s approval for the IPO in 2018. ICICI Securities, Axis Capital, IIFL Securities, JM Financial and SBI Capital Markets are the lead managers to the issue.
Brij Bhushan Agarwal, managing director at Shyam Metalics, is confident of the IPO going through this time around. That, he told BloombergQuint in an interview, is because of the cycle the metal industry is witnessing right now, thanks to growth in economies across the world even during the pandemic.
Shyam Metalics plans to expand its aggregate installed metal capacity of manufacturing and captive power plants from 5.71 million tonnes per annum to 11.60 MTPA over the next four years.
But the company, Agarwal said, would fund the expansion through internal accruals and would remain prudent on its leverage as it continues to achieve forward integration and moving more towards business-to-consumer segment.
Its diversified products mix, strategic location and cost optimization, according to Agarwal, differentiates Shyam Metalics from peers.
Shyam Metalics saw its revenue from operations grow at annualised rate of 6.56% from Rs 3,842.57 crore in fiscal 2018 to Rs 4,362.89 crore in fiscal 2020. The revenue stood at Rs 3,933.08 crore in the nine months ended Dec. 31, 2020.
Its earnings before interest, tax, depreciation and amortisation amounted to Rs 634.05 crore and Rs 717.32 crore in fiscal 2020 and nine months ended December 2020, respectively.
Agarwal expects Shyam Metalics to report a double-digit compounded annual growth rate for Ebitda and revenue. The company, he said, is also the least leveraged among peers.
Watch the full interview here: