Shyam Metalics Q2 Net Profit Jumps 88.5% to ₹493.4 Crore as Operating Margins Expand to 13.8%
Kolkata-headquartered multi-metal manufacturer Shyam Metalics and Energy Limited (SMEL) posted a strong set of earnings for the second quarter ended September 30, reporting an 88.5% year-on-year surge in net profit to ₹493.4 crore, compared to ₹261.8 crore in the corresponding period of the previous fiscal year.
The top-line performance witnessed strong expansion, with revenue from operations rising 33.4% year-on-year to ₹5,960 crore from ₹4,467 crore reported in Q2 of the previous year. The growth in revenue was underpinned by resilient domestic demand for long steel, ferroalloys, and value-added metal products, pushing total sales volumes up 26% year-on-year to 15.49 lakh tonnes.
Operational Efficiencies Drive Margin Expansion
Operating profitability grew at an even faster pace than the top line, reflecting lower input costs and enhanced integration across its production assets.
Key Financial Highlights for Q2:
- Net Profit: ₹493.4 crore, up 88.5% YoY compared to ₹261.8 crore.
- Revenue from Operations: ₹5,960 crore, registering a 33.4% YoY increase from ₹4,467 crore.
- Operating EBITDA: ₹823 crore, surging 52.6% YoY against ₹539 crore.
- EBITDA Margin: 13.8%, expanding by 170 basis points from 12.1% in the prior-year period.
- Sales Volume: 15.49 lakh tonnes, up 26% YoY.
- Return Metrics: Return on Equity (RoE) stood at 14%, while Return on Capital Employed (RoCE) came in at 20%.
Sequentially, the performance built upon momentum seen in the first quarter, where net profit had increased by 18% YoY to ₹345 crore on revenue of ₹5,455 crore.
Strategic Capex and Backward Integration
Alongside its earnings release, the board of Shyam Metalics approved key capital allocation initiatives aimed at securing raw material supply and expanding higher-margin product lines:
- Coal Block Acquisition: The company granted in-principle approval to acquire a 51% controlling equity stake in Alom Solar Private Limited, which holds rights to the Phutamura Coal Block in Raigarh, Chhattisgarh. The block has estimated coal reserves of approximately 170 million tonnes.
- Captive Energy Capex: An initial capital expenditure budget of approximately ₹360 crore was approved for developing and operationalising the Phutamura block, with Shyam Metalics contributing ₹183.60 crore (51%). The company anticipates an incremental annual EBITDA of roughly ₹400 crore by FY31 from this backward integration.
- Aluminium and Beneficiation Additions: SMEL expanded its aluminium foil capacity at Sambalpur by 18,000 tonnes per annum (TPA), bringing aggregate capacity to nearly 42,000 TPA. It also commissioned a new 1.5 million tonnes per annum (MTPA) beneficiation plant at Sambalpur to upgrade lower-grade iron ore and optimize feedstock costs.
Industry Context and Investor Outlook
For Indian equity investors tracking the broader metals space, Shyam Metalics' margin expansion comes at a critical juncture. While secondary steel producers in India have faced margin volatility due to elevated coking coal expenses and import competition, SMEL's blended model—incorporating captive pelletisation, sponge iron, power generation, and structural steel—has insulated its operating metrics.
The move to operationalise captive coal assets further de-risks power generation costs for its steelmaking operations. Analysts view the company's balance sheet discipline, with healthy return ratios and internal-accrual-led capital expenditures, as a key differentiator within the mid-cap metals basket.
