Shyam Metalics IPO opens June 14; offer size cut to Rs 909 crore as promoters offload Rs 252 crore shares

Shyam Metalics has cut the size of its IPO from Rs 1,107 crore to Rs 909 crore. Image: Reuters

Shyam Metalics and Energy Ltd (SMEL) Rs 909-crore initial public offering (IPO) will open for subscription on June 14, 2021. The public issue will close on June 16 and the bidding for anchor investors will open on June 11. The steel maker firm has cut the size of its IPO from Rs 1,107 crore to Rs 909 crore, after promoters offloaded Rs 252 crore shares from their own stake against Rs 450 crore as planned earlier. The fresh issue size remained the same at Rs 657 crore. The lead managers to the issue are ICICI Securities, Axis Capital, IIFL Securities, JM Financial and SBI Capital Markets. KFin Technologies Private Ltd is the registrar to the public issue.

Shyam Metalics and Energy has reported 6.56 per cent CAGR in its revenues from fiscal 2018 to 2020. “Owing to rising metal prices, the metal stocks are enjoying a sharp edge in the market. If the issue is priced reasonably it should garner a strong response from investors,” Abhay Doshi, Founder, UnlistedArena.com, dealing in Pre-IPO & Unlisted Shares, told Financial Express Online.

Shyam Metalics and Energy OFS consists of

– Subham Capital Private Ltd: up to Rs 37 crore
– Subham Buildwell Private Ltd: up to Rs 63 crore
– Kalpataru Housefin & Trading Private Ltd: up to Rs 25 crore
– Dorite Tracon Private Ltd: up to Rs 30 crore
– Narantak Dealcomm Ltd: up to Rs 97 crore

Shyam Metalics and Energy has intended to utilise the net proceeds from the fresh issue for repayment or prepayment of Rs 470 crore of its debt and that of its subsidiary, and for other general corporate purposes. The company has a total metal capacity of 5.71 million tonne and 227 MW of captive power. The capacity will be ramped up to 11.57 million tonne by 2025 as brownfield projects in two plants of Jamuria in West Bengal and Sambalpur in Odisha. “With states gearing up to unlock the economic activity in a phased manner, the metal sector’s outlook seems to be improving and Shyam Metalics is positioned well to sustain in the long term as they are one of the least leveraged steel makers,” Likhita Chepa, Senior Research Analyst at CapitalVia Global Research, told Financial Express Online. Chepa has advised investors to subscribe to this issue with a long-term perspective.

The listed peers of Shyam Metalics and Energy Ltd are Tata Steel Ltd, JSW Steel Ltd, Steel Authority of India Ltd, Jindal Steel and Power Ltd and Tata Steel Long Products Ltd. Steel demand is closely related with GDP growth, with steel demand to GDP growth multiplier varying across phases. After lagging India’s GDP growth from 2012 to 2013, steel demand growth outpaced macro-economic growth in Fiscal 2018 and Fiscal 2019. A gradual expansion in GDP and rise in income has led to robust growth in auto, consumer durables, railways, affordable housing, and rural housing. India is the second-largest producer of steel in the world with a nearly 6% share of global steel production.

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