Steel Stock With ₹6,660 Cr Capex and Major Expansion Plans to Keep on Your Radar

SYNOPSIS: Shyam Metalics and Energy Limited reported strong YoY growth but weaker QoQ performance in Q3 FY26, while outlining aggressive multi-segment capex plans and targeting over 2.5x revenue and EBITDA growth by FY31.

One of the leading multi-metal conglomerates with footprints in carbon steel, stainless steel, specialty alloys and aluminium foil, along with a captive power plant, is worth focusing.

We are talking about Shyam Metalics and Energy Limited, engaged primarily in the business of manufacturing and sale of steel and allied products, including pellets, sponge iron, MS billets, THT and long products, speciality alloys and power generation. It is one of the leading integrated steel producers and among the largest ferro alloys producers in India, a leading player in terms of pellet capacity and ranked as the 4th largest sponge iron player.

With a market cap of Rs. 23,320 crores, shares of Shyam Metalics and Energy Limited surged nearly 5 percent on BSE to hit an intraday high at Rs. 838.35 on Wednesday, as against its previous closing of Rs. 799.5 on BSE. The stock has delivered positive returns of around 17 percent in one year, and has gained by more than 2 percent in the last one month.

Financials

While the company delivered healthy year-on-year growth, both revenue and net profit witnessed a marginal decline on a quarter-on-quarter basis. For Q3 FY26, the company posted a consolidated revenue from operations of Rs. 4,421 crores, reflecting a sequential decline of over 1 percent QoQ compared to Rs. 4,467 crores in Q2 FY26. In contrast, on a year-on-year basis, revenue grew nearly 18 percent from Rs. 3,756 crores recorded in Q3 FY25.

Net profit for Q3 FY26 stood at Rs. 198 crore, indicating a decrease of nearly 24 percent QoQ from Rs. 260 crores in Q2 FY26, while a marginal year-on-year rise by around 1 percent from Rs. 197 crores reported in Q3 FY25.

For Q3 FY26, steel products continued to dominate the revenue mix, contributing around 73 percent of total revenue. Within this, carbon steel emerged as the largest segment, accounting for about 36.5 percent. Specialty alloys contributed 11.8 percent, while pig iron formed 10.6 percent of revenues. Sponge iron accounted for 12.3 percent, followed by CR coil and sheet at 7.7 percent and iron pellets at 5.6 percent. Aluminium foil contributed 4.4 percent, stainless steel made up 7 percent, and the remaining 4.1 percent came from other products.

Capex Plans & Expansion Plans

The Board of Shyam Metalics has approved a fresh capex plan with a total outlay of Rs. 6,660 crore, aimed at expanding capacities across multiple segments over the next few years, to drive value-added growth and enhance margins. The planned capex will be directed towards capacity expansion and strengthening the company’s integrated operating model.

The capex includes an investment of Rs. 200 crore to commission 4,800 railway wagons per annum by September 2027. During the quarter, the company made a strategic entry into the rolling stock segment with the commissioning of a state-of-the-art greenfield wagon manufacturing facility at Kharagpur, West Bengal. The facility will manufacture a wide range of wagons, including flat, open, box, covered hopper, tank and specialised wagons.

A major portion of the investment, amounting to Rs. 5,400 crore, has been earmarked for setting up a hot rolling mill plant and furnace with a capacity of 1.58 MTPA, expected to be commissioned by September 2029.

In addition, the company plans to invest Rs. 200 crore in a blast furnace at Kharagpur, adding 0.1 MTPA of capacity, and Rs. 410 crore in a blast furnace at Jamuria to add 0.21 MTPA, with both projects scheduled for commissioning by June 2027.

The capex plan also includes Rs. 450 crore for an 80 MW captive power plant, targeted for completion by June 2027. Overall, the planned expenditure is expected to be incurred over the next three years, supporting the company’s capacity expansion and operational integration strategy.

The company has incurred ongoing capex of Rs. 8,038 crore till Q3 FY26, representing about 85 percent of the total planned capex of Rs. 9,425 crore, of which Rs. 5,357 crore has already been capitalised.

Expected Growth Trajectory

Shyam Metalics expects a strong growth trajectory over the coming years, with revenues and EBITDA projected to increase by more than 2.5 times over the next 5 years (by FY31) compared to FY25 levels. Based on historical performance across business cycles, the company has delivered a revenue CAGR of 16 percent and an EBITDA CAGR of 19 percent over the past two decades.

Management believes that even with conservative growth assumptions of 15-17 percent CAGR in revenue and 18-20 percent CAGR in EBITDA, the company can achieve this growth without raising additional capital while maintaining promoter ownership of 75 percent.

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