SHYAMMETL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.2

📊 Core Financials Breakdown

Profitability

ROE of 8.48% and ROCE of 12.0% are modest, suggesting average capital efficiency.

EPS of ₹17.7 supports a high P/E of 51.6, which is more than double the industry average (24.0), indicating overvaluation.

PAT grew from ₹99.5 Cr to ₹168 Cr, but the QoQ variation is just 2.94%, implying limited momentum.

Balance Sheet Strength

Debt-to-equity ratio of 0.03 is excellent, showing minimal leverage and strong financial discipline.

Dividend yield of 0.49% is low, but consistent with reinvestment-focused companies.

Cash Flow & Stability

Book Value of ₹214 vs Current Price ₹915 implies a P/B ratio of ~4.28, which is on the expensive side.

PEG ratio of -3.45 is distorted due to inconsistent earnings growth.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 51.6 Overvalued vs industry PE of 24.0

P/B Ratio ~4.28 Premium pricing

PEG Ratio -3.45 Not meaningful due to erratic growth

Intrinsic Value ~₹750–₹800 Estimated below current price

The stock appears overvalued, especially given its moderate return metrics and earnings volatility.

🏭 Business Model & Competitive Edge

Sector: Shyam Metalics and Energy Ltd operates in the steel and ferro alloys space, with integrated facilities and a growing footprint in long products and pellets.

Strengths

Low debt and strong operating infrastructure

Institutional interest rising (DII +1.05%)

Challenges

High valuation multiples

Weak ROE and limited profit growth

RSI at 44.8 and MACD negative, suggesting short-term technical weakness

According to TopStockResearch, the company struggles to generate sufficient free cash to support its business, which may limit reinvestment and expansion.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹780–₹820

Below 200 DMA (₹861) and closer to intrinsic value

RSI and MACD suggest a potential pullback or consolidation

🧭 Long-Term Holding Guidance

Hold if Already Invested: Provided you're targeting long-term sector recovery and operational leverage.

Avoid Fresh Entry at Current Levels: Wait for valuation to cool or earnings to accelerate.

Watchlist Triggers

ROE/ROCE improvement

Volume breakout

Institutional accumulation

Shyam Metalics is a well-positioned industrial player, but its current pricing demands caution. Let me know if you'd like a peer comparison with Tata Steel or JSW Steel.

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