Shares of Shyam Metalics and Energy Ltd rose 8 percent on Wednesday, December 21, after the company informed that it has forayed into the stainless steel business by acquiring Indore-based Mittal Corp Ltd in an NCLT-led resolution process.
“Mittal Corp's acquisition cost is about ₹450 crore, and we outbid Jindal Stainless, the competitor for the sick asset put under the NCLT resolution process. The acquisition will enable us to foray into stainless steel and special products, such as defence materials,” Shyam Metalics vice-chairman and managing director Brij Bhusan Agarwal was quoted as saying by PTI.
During Wednesday’s trade, the stock opened positively at a price of Rs. 306.80 per share against the previous close of Rs. 291.55 per share and surged further during the early trade to touch an intraday high of Rs. 317.75 per share. It was trading at ₹313.05 apiece, up by 7.37 percent, at 11:40 a.m. on the NSE.
The stock touched a 52-week high of Rs. 385.50 on March 24, 2022 and a 52-week low of Rs. 273.10 on June 20, 2022, indicating that at the current level, the stock is trading 14.6 percent above its 52-week low and 18.8 percent below its 52-week high.
The stock has shown a positive growth of 6.5 percent in the last five days. In the past six months, it has grown by nearly 11 percent. However, the stock has declined by over 19 percent in the last five years.
To meet market regulator SEBI's norm, the promoters need to dilute their current holding of 88 percent in Shyam Metalics by at least 13 percent within the next 18 months, vice-chairman and managing director Brij Bhusan Agarwal said.
The process of dilution will depend on the market situation but is likely to begin in the next 6-9 months.
The stake dilution will be from a combination of a fresh equity issue and an offer for sale which will fuel the company's integrated capacity from 8.8 million tonnes to 14.4 million tonnes by 2025.
With the acquisition, Shyam Metalics adds 150,000 tonnes per annum stainless steel, wire rod and bar mill capacity. It will invest ₹7,500 crore over five years to diversify its metals businesses further.
In 2021, Shyam Metalics acquired a company in the aluminum foil metal space and implemented aluminium foil rolling plant in West Bengal. It also took control of Ramsarup Industries through NCLT. Since taking over Ramsarup Industries in May of this year, Shyam Metalics has been working to improve and revitalize its business practices and steel manufacturing facilities.
Shyam Metalics is a small-cap company with a market valuation of Rs. 7,436.88 crore. It is engaged in the business of manufacturing and selling of ferroalloys, iron and steel, products and power generation. It exports the products to the United States, Italy, Dubai, Oman, and Taiwan.
According to a MintGenie poll, 4 analysts on average have a ‘STRONG BUY’ call on the stock.