By 11:30 am, the IPO received bids for 61,24,680 shares, which was 29 per cent of the total issue of 2,10,90,890 shares. Shares under the IPO are being sold in the price band of Rs 303-Rs 306 apiece. The IPO comprises an offer for sale of up to Rs 252 crore and fresh issuance of shares worth up to Rs 657 crore.
At the upper price band of Rs 306, the Shyam Metalics IPO is available at 9.1 times FY21 EV/Ebitda on an annualised basis.
Analysts find the IPO fully priced but believe the rise in metals prices globally and hopes of a recovery in domestic demand could work for the company. They largely have ‘subscribe’ ratings on the issue.
“Domestic steel demand impacted by Covid-19 will pick up in FY22 and continue its strong growth at 6 per cent through FY25. Restrictions on Chinese exports due to higher domestic demand and surging international steel prices will benefit Indian steel makers like Shyam Metalics, Geojit said as it assigned a ‘subscribe’ rating to the issue from a short-to medium-term perspective.
Ventura Securities has initiated coverage on the unlisted stock with a target of Rs 436.40, based on FY23 EV/Ebitda of six times on a post-issue equity basis. “Our price target represents an upside potential of 42.6 per cent over 18-24 months from the IPO price,” it said.
In the unlisted market, the stock is enjoying a grey market premium of Rs 150-160, translated as more than 50 per cent on the issue price.
Choice Broking said a trailing 12-month EV/Ebitda multiple of 8.6 times for Shyam Metalics is at a premium to the peer average of 6.4 times.
Despite factoring in an exponential rise in Ebitda in March quarter, valuation still appears overvalued, said Choice Broking, suggesting a “subscribe with caution” rating for the issue.
Shyam Metalics is among the leading integrated steel and ferroalloys producers in Eastern India. It has three manufacturing units with an operating capacity of 5.70 million tonnes per annum, with 227 mw of captive power capacity.
On Friday, the company raised Rs 269.94 crore, allocating 88,21,764 shares to 21 anchor investors at Rs 306 apiece.
The company has proposed to use the net proceeds from the fresh issue towards repayment or prepayment of up to Rs 470 crore of its debt and that of its subsidiary, Shyam SEL and Power, and for other general corporate purposes.
