Net profit jumps 334.6 percent; Company Pursuit of Higher margins, do you own it?

The profitability picture is notably positive, with Net Profit witnessing a remarkable 334.6 per cent year-on-year growth, reaching Rs 482.0 Crores.

The company experienced a 4.7 per cent year-on-year decline in revenues, despite the decline in revenue, there was a noteworthy improvement in EBITDA and Net Profit. The profitability picture is notably positive, with Net Profit witnessing a remarkable 334.6 per cent year-on-year growth, reaching Rs 482.0 Crores. The profit margins also improved significantly, rising from 3.6 per cent in Q2 FY23 to 16.4 per cent in Q2 FY24, showcasing a strong bottom-line performance and effective cost management.

The profitability trend continued to shine, with H1 FY24 PAT reaching Rs 683.9 Crores, marking a robust 30.3 per cent increase from the same period last year. The corresponding profit margin for H1 FY24 was 10.9 per cent, an improvement from the 8.3 per cent reported in H1 FY23.

Management Commentary

Shyam Metalics & Energy Ltd's Vice Chairman & Managing Director, Mr. Brij Bhushan Agarwal, commented on the company's recent financial results, highlighting a positive trajectory in scaling up the value-added products portfolio. He noted increased contributions from specific segments, driving improved margins. The successful acquisition of Mittal Corp. marked SMEL's entry into the stainless-steel business, offering multiple benefits. Emphasizing their commitment to the recently announced capital expenditure plan, Agarwal aims to enhance backward integration, enabling the company to deliver a variety of downstream products. The overarching strategy focuses on capturing higher-margin opportunities in Steel, Stainless Steel, Ferro Alloys, and Aluminium Foil Products, aligning with SMEL's goal of generating long-term value for stakeholders.

Financial Snapshot

Currently the stock is trading at Rs 456.30 and it is 7.70 per cent away from its 52 weeks high. The company share has given a remarkable gain to its investors in one year time period which stands at 52.33 per cent. Although, the stock has not performed well in other timeframes but company has low debt levels, its book value per share has demonstrated a positive trend over the past two years. Moreover, the company stands out for having zero promoter pledge. There is a notable increase in shareholding by Foreign Institutional Investors.

About Company

Shyam Metalics And Energy Limited (SMEL) is a leading integrated metal producer in India, specializing in long steel products and ferro alloys. It holds a prominent position as one of the largest ferro alloy producers, a key player in pellet capacity, and the fourth-largest in sponge iron capacity in the country. With a diversified product mix, SMEL sells both intermediates and final products throughout the steel value chain. Since its inception in Fiscal 2005, the company has consistently delivered profitability. Notably, SMEL boasts an upgraded rating of CRISIL AA (Stable) for Long Term Bank Facilities and CRISIL A1+ (Stable) for Short Term Bank Facilities, showcasing its financial strength as one of the least leveraged steel companies in India.

Disclaimer: The article is for informational purposes only and not investment advice.