scorecardresearch

Shyam Metalics IPO opens June 14: Should you subscribe to the issue?

The company has allocated 88,21,764 equity shares to 21 anchor investors at a price of Rs 306 per equity share

Representative Image Representative Image

Shyam Metalics and Energy Ltd has collected Rs 270 crore from anchor investors, ahead of its Rs 909 crore IPO that opens for subscription on June 14.

The company has allocated 88,21,764 equity shares to 21 anchor investors at a price of Rs 306 per equity share.

White Oak, Kotak Mutual Fund (MF), L&T MF, Aditya Birla Sun Life Insurance Company, SBI General Insurance Company, Abakkus Growth Fund, Kotak Offshore, GAM UK, Aurgin Master Fund Ltd, IIFL Asia Opportunities Fund, and Dovetail are among the anchor investors.

The IPO comprises fresh issuance of equity shares worth up to Rs 657 crore and a Rs 252 crore-OFS (Offer For Sale) by existing shareholders.

The price band for the offer has been fixed at Rs 303-Rs 306 per share.

"Considering the TTM (Dec 20) adjusted EPS of 21.02 on a post-issue basis, the company is going to list at PE of 14.6X with a  market cap of Rs. 7805.5 crore whereas its peers namely Tata Steel and JSW Steel are quoting at higher PE of 16.6X and 21.6X respectively," said analysts at Marwadi Financial Services.

They have also given a 'subscribe' rating to the issue as it is a leading integrated metal producer with strategically located manufacturing facilities and good financial performance and distribution network along with favorable valuation.

The company will utilise the net proceeds from the fresh issue for repayment or prepayment of debt worth Rs 470 crore and that of its subsidiary, Shyam SEL and Power Ltd, and for other general corporate purposes.

Shyam Metalics and Energy Ltd. is amongst the largest producers of ferroalloys in terms of installed capacity and the fourth-largest player in the sponge iron industry.