5 Major Market Stories to keep an eye on - May 2021

Stock market stories May 2021
by Nikita Bhoota 12/05/2021

We have witnessed lot of volatility in Indian stock markets in April 2021. Surge in Covid-19 cases, declaration of state lockdown, concern over vaccine availability and quarterly results were some of the major reasons that have affected market performance and investor sentiments.

After the uncertainty of Apr-2021, here are 5 major stock market stories to keep an eye on in May 2021
 

  • COVID19 Cases

Increasing COVID cases are a concern with over 400,000 cases per day. If lockdowns get extended, markets will be disappointed and likely to witness a downward trend. The major challenge is to expand vaccinations, control the spread of COVID and minimize the economic impact.

  • Quarterly Results:

SEBI has given time till end of Jun-2021 to declare quarterly and annual results. Only ~20% of the BSE-500 companies have declared Mar-2021 results and numbers have been better yoy however, below the Dec-2020 quarter as per the market reports. May will see the results trajectory being established.

  • Foreign portfolio investors (FPI) Action:

Foreign portfolio investors withdrew Rs 12,039 crore from Indian equities in April after infusing nearly $37 billion in FY21. May will decide whether this FPI outflow was a temporary action or an act due to something serious with the economy.

  • Fiscal Stimulus:

Will there be another fiscal stimulus by the government? There are expectations that government may announce a smaller stimulus in May-2021 to reduce the pain, apart from throwing some helicopter money. Rate cuts are likely to be ruled out for now. Experts have demanded a fresh stimulus package aimed at boosting the economy and putting cash in people’s hands, especially the marginalised, as the second wave of the novel coronavirus disease (COVID-19) pandemic continues to rip through India.

  • Inflation Data:

Lastly, the big story in May will be inflation. The lockdown would have deteriorated supply chains and it is likely that inflation spiking once again in May. It would be a concern if it crosses the RBI comfort zone of 6%. In India, consumer price index (CPI) inflation stood at 5.52% in March compared to 5.03% in February and 4.06% in January. The rise in CPI inflation was driven by a surge in fuel and transportation costs along with an increase in some components of the food basket. Moreover, the record Covid-19 surge across the country now, especially at a time when advanced economies have already started recovering, could put serious upward pressure on inflation.

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5 Stocks to BUY during Coronavirus (COVID 19) pandemic

5 Stocks to buy during COVID-19
by Nikita Bhoota 20/05/2021

The Indian economy has performed relatively better than expected in 2HFY2021. The efforts taken by the GoI in the FY22 Budget marked the clear path for driving growth whilst compromising on fiscal prudence in order to drag the economy out of the Covid led slide. However, the current Covid second wave has re-imposed fresh partial lockdowns, limiting the economic activities.  As some economic & health indicators are already pointing towards downward revision in the GDP forecast, investing in the covid resilient sectors would be an ideal strategy to tide the second wave of Covid. We believe, sectors like Healthcare, Pharma, Diagnostic & selected FMCG will continue to thrive during the FY22.

Recommended Stocks CMP (Rs) Target (Rs) Upside
JB Chemicals & Pharmaceuticals (JBCP) 1,372 1,680 22.40%
Thyrocare Tech 1,027 1,250 21.70%
Cipla 904.00 1,050.00 16.20%
Dabur 538 620 15.20%
Apollo Hospitals 3,230 3,550 9.90%

Source: 5paisa Research, * price as on 19th May ,2021.

Investment Rationale:
Cipla:
Cipla is one of the largest Indian pharma companies. It is a major player in the domestic formulations market, which contributes ~39% of its total revenue. Cipla makes drugs to treat cardiovascular disease, arthritis, diabetes, weight control, depression and many other health conditions. We are positive on the stock due to strong build-out expected in the US business led by the inhalation portfolio, where we believe respiratory products alone can add incremental sales of USD230-250mn (40-45%) to the US business by FY25E and drive 12% cc Cagr (18% incl. Revlimid) in US sales over FY21-23E.  Sustained traction in chronic therapies will drive 7.5% Cagr in India sales over FY21-23E, despite the higher base.  We believe US respiratory launches, synergies from the One-India strategy and further cost optimization would drive a sustainable increase in return ratios over the medium term. The stock trades at 24.3x FY23E EPS.

JB Chemicals & Pharmaceuticals (JBCP) 
JBCP is a 40-year old pharma company with several well established brands in the domestic market and wide geographical presence in the both regulated and semi-regulated markets. While JBCP has created strong brands in the cardiac & gastro segments in India, focus ahead will be to diversify into diabetes, nephrology, paediatrics and respiratory. Expansion into these therapies will not entail an additional sales force, as mgmt. is re-aligning the GTM strategy for its rep team, by combining existing divisions. JBCP also intends leveraging its relationships with 0.3m doctors, to drive penetration in new therapies. Mgmt. is targeting 12-14% growth in its India PCPM over medium term, driven by 6-8 annual launches & increasing contribution from chronic therapies. Incremental R&D investments and BD opportunities will help JBCP augment its product portfolio and drive better growth in its branded generics businesses. Two new product launches are also planned in Russia in FY22, while JBCP intends to ramp-up its US ANDA filings to 4-6 from 1-2 pa, going forward. Although JBCP will look to complement its organic growth through acquisitions, management stated that 50% of the incremental capital allocation will be dedicated to the India business, where it will look to acquire brands/mid-size companies and, possibly, enter into inlicensing deals with MNC companies for the cardio-diabetes.

Apollo Hospitals
Apollo Hospitals is an integrated healthcare provider, with services ranging from hospitals, retail pharmacies, health insurance, clinics etc. The company is a pioneer in corporate hospitals and forms the largest hospital chain & organized retail pharmacy chain in India. Apollo’s overall hospital occupancies improved to 63% in 3Q from 56% in 2Q. While non-Covid occupancy stood at 60% in 3Q, it was already at 67% in Dec-20. Mgmt. indicated that occupancies should reach pre-Covid levels of 68-70% by 1Q/2QFY22, led by pick-up in international patients, domestic travel and improving surgical volumes. Healthcare services margins improved QoQ, from 11.5% to 18.5%, led by higher ARPOB and increase in surgical volumes. Mgmt. targets expanding margins for mature hospitals to 23-24% (current 20- 21%) and for new hospitals to 15% (current 13-14%) over the next 12-18 months, led by international patients and high-end surgeries. Kolkata hospital expected to contribute Rs800-850mn Ebitda in FY22ii (vs. nil in FY21). Pharmacy margins are also expected to improve, to 7% in FY22E from 6.5% in 3Q. Of the Rs11.7bn QIP proceeds, Rs4.1bn will be utilized for acquisition of 50% stake in Kolkata hospital and Rs1.5bn each for Apollo 24/7 and the diagnostics business Apollo aims to achieve preventive healthcare revenue of Rs10bn in the next 3 years, from Rs2.5bn currently. It also aims to scale diagnostics revenues to Rs5bn from Rs1.6bnpa, by deepening presence in South/East market.

Dabur:
Dabur India is one of the largest FMCG companies in India, with interest in health care, personal care and food products. Building on its legacy of quality and experience of over 100 years, Dabur has a number of powerful brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola, Real, etc. The company primarily operates in four segments i.e. consumer care, international business, foods and retail. Its international business spans across Southeast Asia, MENA and USA, and contributes around 30% to its total revenue. Covid tailwinds resulted in acceleration in the healthcare portfolio, the momentum has sustained at a high level for the third consecutive quarter in categories such as honey, chyawanprash, OTC and ethicals. Growth is likely to settle at a lower, but robust level in this portfolio. Dabur is ticking the right boxes in terms of riding the healthcare momentum and has accordingly stepped up ad-spends intensity. Recovery in hair care, juices and international has further sweetened the performance. The management highlighted that input cost inflation has inched up to 5- 6% in categories such as honey, amla, herbs and spices and the company would look to pass it on to consumers. Also, management indicated that ad-spend intensity would remain high to support brand investments and new launches. Dabur aspires to increase its ad-spends as a percentage of sales to ~11.5-12%, similar to HUL.

Thyrocare Tech:
Thyrocare is the largest B2B diagnostics player in India primarily serving smaller standalone labs, hospitals, nursing homes and doctors. Thyrocare operates a Centralised Processing Laboratory (CPL) at Navi Mumbai, which is supported by 11 Regional Processing Laboratories (RPLs). B2B segment accounts 80-85% of Thyrocare’s pathology revenue, while Thyrocare has also created a strong brand for itself through ‘Aarogyam’ test profiles in the wellness segment.  Thyrocare’s strong B2B model and industry leadership in wellness testing allows it to process high volumes of routine tests which, along with lower sample acquisition costs, drive significant operational efficiencies and 40% margins for Thyrocare. While its revenue growth had slowed during FY17- 20, mgmt. is striving to drive improved accessibility for the brand by doubling company’s network of branded collection centers to ~1,000 TSPs by the end of CY21. While network expansion will contribute significantly to company’s growth from FY23E, it will also help Thyrocare to expand its customer base, improve TAT and further optimize logistics costs. Thyrocare trades at 30-50% discount to its B2C peers owing to higher pricing pressures in B2B/wellness segment, Thyrocare’s unparalleled focus on operating efficiencies enables it to offset such pricing impact.  We expect 12% revenue Cagr for Thyrocare over FY21-23E.

We are glad to announce that our recommended Portfolio has performed well wherein almost all the stocks in the portfolio have achieved the desired targets and have given strong returns throughout the last year. Check our performance of COVID-19 portfolio that was suggested in 2020

Wondering how to start trading in stocks? Visit our Stock Trading section to learn more.

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Yayyyy!!! Nifty Hits Record High, Why?

nifty hits all time high
by Nikita Bhoota 28/05/2021

The bulls have won the race and have taken charge of Indian markets, pushing the Nifty50 to record highs on May 28 even as the market cap of BSE-listed companies has gone past $3 trillion for the first time.

The Nifty touched a record high of 15,469.65 on May 28 and has rallied more than 10 percent in 2021. The rise in market has been led by gains in Sun Pharma, Divi’s Laboratories, SBI Life, IOC, Asian Paints, Wipro, Tata Steel, and JSW Steel, which are up 10-60% since February 16 when the index hit the previous high of 15,431.

Here, we have discussed 5 factors that supported the market performance:

Fall in Covid19 cases:

The Union government on Thursday said that India is now seeing a stabilisation of the second wave of the pandemic as the active cases and the test positivity rate is witnessing a declining trend after peaking in early May. India recorded 186,364 new covid19 in the last 24 hours’ taking the country’s total to 2,755,5457 cases according to union health ministry data on Friday. This is the lowest daily covid19 number since April 14, as infections continue to decrease in the country.

Rapid Recovery in Vaccination:

According to the health ministry statement, a total of 20,04,94,991 vaccine doses have been administered, as per the provisional report till morning of 25th May 2021. As per the media reports, the supply of Covid-19 vaccines is likely to increase gradually from June, helping India get close to 300 crore doses in the seven-months period ending December.

GST Council Meet:

The GST Council is likely to discuss on Friday a reduction in the tax rate on Covid medicines, vaccines and medical equipment as well as means to make up for the shortfall in revenues promised to states. Thus, this may have improved investors sentiments.

Healthy Quarterly Results:

Most of the Indian corporates usually registered growth or improved top-line or bottom-line numbers in the March quarter of the year 2021 despite Covid19 challenges. Improving consumer sentiments, easing lockdown restrictions, favorable Government policies, fall in Covid19 cases and rapid vaccination process supported the financial performance of the companies.

 

US Job Data:

The procession of Americans heading to the unemployment line fell last week, with jobless claims totaling a fresh pandemic-era low of 444,000, the Labour Department reported Thursday. Economist surveyed by Dow Jones had been expecting 452,000 new claims as the jobs picture improves thanks to an accelerated economic reopening across the country. The total represented a decline from the previous week’s 478,000.

Stock Performance Nifty 500

Nifty 500 Top Gainers
Source: Ace Equity

5 stocks in the Nifty 500 list have given more than 100% returns between the period February 16,2021- May 27, 2021, more than 38 stocks have given more than 50% return. Recently, the market cap of BSE-listed companies surpassed the $3 trillion- mark, making the Indian market the eighth largest in the world.

Disclaimer: The above report is compiled from information available on the public platforms. These are not buy or sell recommendations.

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Highlights of RBI Monetary Policy and Market Performance

RBI Monetary Policy
by Nikita Bhoota 04/06/2021

The Reserve Bank of India (RBI) governor Shaktikanta Das addressed a press conference today and this was the second bi-monthly Monetary Policy Committee (MPC) meeting for this fiscal year. Governor Shaktikanta Das announced the MPC's decision after it concludes its three-day meet on June 4, 2021.

Highlights of RBI press conference:

  1. RBI MPC Keeps Rates Unchanged

RBI MPC keeps repo rate unchanged at 4%, reverse repo rate at 3.35%.  This is the sixth time in a row that RBI has kept the benchmark rates unchanged. Experts also earlier anticipated that RBI is likely to keep the policy rates unchanged and maintain accommodative stance amid the growing uncertainty over COVID-19 pandemic.

Repo Rate

Source: Media Reports, RBI

  1. MPC to Continue with Accommodative Stance:

The RBI's Monetary Policy Committee (MPC) has decided to continue with accommodative stance until necessary to mitigate impact of COVID-19. The Marginal Standing Facility (MSF) rate and bank rates remain unchanged at 4.25%.

  1. FY22 GDP Forecast Reduced to 9.5%:

RBI MPC reduced FY22 GDP forecast to 9.5% from earlier estimate of 10.5%. The Q1FY22 GDP forecast has been slashed to 18.5% from earlier estimate of 26.2%.

  1. RBI Forecast Normal Monsoon:

According to Governor, forecast of normal monsoon and resilience of agriculture and farm economy will provide tailwinds to growth revival.

  1. Operation Under G-SAP 1.0 Will Conducted on June 17:

Primarily, the G-SAP move is aimed at supporting the bond markets which also results in softening of corporate bond yields. The Reserve Bank of India (RBI) Governor Shaktikanta Das announced that another round of Government Securities Acquisition Program (G-SAP 1.0) worth Rs 40,000 crore will be conducted on June 17. Additionally, G-SAP 2.0 of Rs 1.2 lakh crore will be conducted in Q2 FY22. Of the additional round under G-SAP 1.0, Rs 10,000 crore would constitute purchase of state development loans (SDLs).

  1. CPI Inflation:

RBI says, CPI inflation is projected at 5.1% in FY22. 5.2% in Q1; 5.4% in Q2; 4.7% in Q3; and 5.3% in Q4 with risks broadly balanced.

  1. FOREX:

India’s foreign exchange reserves touches $600 billion. Formal announcement in due course. Later today, we will see it at $598 billion, RBI Governor.

  1. Big measures for MSMEs

Special liquidity facility of Rs 16,000 crore for MSMEs via SIDBI For 1-year at repo rate

Exposure Threshold Under Resolution Framework 2.0 Increased to Rs 50 crore from 25 crore for MSMEs

  1. On-tap Liquidity Window for Contact-intensive sectors:

The Reserve Bank of India (RBI) on Friday announced creating a special liquidity window of Rs 15,000 crore with a tenor of 3 years at the repo rate to provide liquidity support to the contact-intensive sectors hit by Covid-19.

 The special liquidity window encourages banks to provide fresh lending support to hotels, restaurants, tourism, aviation ancillary services, and other services including private bus operators, car repair services, rent-a-car service providers, event/conference organizers, spa clinics, and beauty parlours/saloons.

Market Performance:

Nifty 50  index dropped 64 points today

Below is the performance of Sectoral Indices

Indices

% Change

Nifty Bank

- 1.00

Nifty Auto

+ 0.83

Nifty Fin Service

- 0.22

Nifty FMCG

- 0.36

Nifty IT

+ 0.03

Nifty Media

+ 1.02

Nifty Metal

+ 1.35

Nifty Pharma

- 0.09

Nifty Psu Bank

- 0.16

Nifty Pvt Bank

- 0.81

Nifty Realty

+ 0.48

Source: NSE

Watch this video on RBI Policy

Disclaimer: The above report is compiled from information available on the public platforms.

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How Stock Markets Performed in May 2021?

Stock market Performance
by Nikita Bhoota 07/06/2021

Market Update:
In May 2021, global markets largely continued their upward moment supported by encouraging sentiments that the US economic recovery from the pandemic is gaining momentum. 

Further, progress towards US’s multi-trillion-dollar spending boost coupled with softness in the US 10-year bond yields despite sharp rise in inflation, added to the positive sentiments.

Indian markets played catch-up with the global markets and hit a fresh high on rapid fall in new Covid cases across the country.

Both Nifty 50 and BSE Sensex went up 6.5% in May. As the institutional investors remained absent during the month, retail and non-institutional investors lifted the frontline indexes.
Mid cap and small cap indexes outperformed frontline indexes due to very strong interest by the retail investors in the broader markets.

FIIs bought ₹197cr (vs. ₹6,559cr sold MoM) in Indian equities, while DIIs bought ₹254cr worth of equities (vs. ₹5,933cr bought MoM) during the month.

Indian Equity Markets:

On the sectoral front, PSU Bank Index led the gains (strong earnings and improved asset quality in Q4) with ~18% MoM returns followed by Energy with ~10% MoM returns (strong demand from China, weaker dollar index) 
As the states started to ease localized lockdowns after continuous decline in active cases throughout the May month, investors got enthused believing that relaxing of lockdowns would revive the economic activities in the respective regions.

Fixed Income Markets:
India’s 10-year bond yields remained stable at around 6.0% on RBI’s efforts to keep a lid on long term bond yields through Govt. Securities Acquisition Programs (GSAP), OMOs and Operation Twist.

India’s GDP for Q4FY21 grew by 1.6% (Q3FY21: 0.5%) mainly driven by exceptional performance by construction sector, further aided by manufacturing and utilities. However, hospitality ecosystem continued to suffer due to targeted lockdown across the country. The economy contracted 7.3% for FY21 (FY20: 4.0%). 

Despite muted foreign inflows, Indian rupee strengthened due to resilient domestic equities and weaker dollar index. Rupee appreciated by 2.2% to 72.44 vs. the USD at the close of May 2021

Stock Performance:
Below are the top 5 gainers and losers on Nifty50 in May 2021.
 

Company Name

03-05-2021

31-05-2021

Gain

UPL Ltd.

617.8

815.1

31.9%

State Bank Of India

350.6

424.4

21.0%

Indian Oil Corporation Ltd.

91.5

109.3

19.5%

Asian Paints Ltd.

2,582.2

2,977.5

15.3%

Bharat Petroleum Corporation Ltd.

416.0

472.0

13.5%

Source: Ace Equity 

UPL Ltd:
The company's signed a multi-year agreement with Soil Health Institute. Additionally, Brokerage firm CLSA has maintained its positive rating for this stock. The company also declared Q4 results which were better than expected.

State Bank of India:
Bank stocks were up during the month because of the increased interest of investors in the sector. Additionally, the bank's Q4 result were better than expected. The bank had reported an 80% rise in its net profit during the January to March quarter results.

Indian Oil Corporation Ltd.
The stock price climbed on petrol and diesel prices being increased. (IOC) share price touched a 52-week high in the month May 2021 

Asian Paints Ltd.
The company declared Q4 results which were better than expected. Revenue from operations has risen by 43.5% to Rs6,651.43cr from Rs 4,635.59cr. Profit before depreciation, interest, tax and other income (PBDIT) for the group (before share in profit of associates) increased by 53.4% to Rs1318.26cr from Rs 859.62cr. Profit Before Tax (from continuing operations) increased by 65.4 % to Rs1,156.31cr from Rs 699.22cr. Total dividend of Rs 17.85 per equity share (1785%) was distributed for FY 2020-21. The dividend payout ratio was 56.1% for FY 2020-21.

Bharat Petroleum Corporation Ltd.
The markets were expecting a huge dividend payout from the company. Also, according to a few news reports, the government is expecting bids to come in for BPCL's privatization by July end.
 

Company Name

03-05-2021

31-05-2021

Loss

Bharti Airtel Ltd.

558.9

534.9

-4.3%

Hindustan Unilever Ltd.

2,408.0

2,340.1

-2.8%

Tata Consumer Products Ltd.

677.1

663.9

-2.0%

JSW Steel Ltd.

723.3

710.9

-1.7%

Shree Cement Ltd.

27,989.9

27,578.0

-1.5%

Source: Ace Equity

Bharti Airtel Ltd.
Telecom major Bharti Airtel reported a consolidated net profit of Rs 759 crore for the quarter ended March 31, 2021 (Q4FY21). Mobile average revenue per user (ARPU) saw a dip on quarter-on-quarter basis during the March quarter to Rs 145. It was Rs 166 in Q3FY21.

 

Tata Consumer Products Ltd.
The company reported a profit in the January to March quarter but missed analyst expectations.

 

JSW Steel Ltd.
The crude steel production of JSW Steel stood at 13.71 lakh tonne in April 2021, a 5.2% drop from March. Additionally, Credit Suisse downgraded this stock as it sees multiple risks to steel prices ahead.

 

Shree Cement Ltd.
The company posted its Q4 results and posted better than expected results. The stock will down despite that.

Disclaimer: The above report is compiled from information available on the public platforms. These are not buy or sell recommendations.

 

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Shyam Metalics and Energy Ltd IPO Information Note

Shyam Metalics IPO
IPO
by Nikita Bhoota 14/06/2021

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so. This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.


Shyam Metalics IPO Details

Issue Opens - June 14, 2021

Issue Closes - June 16, 2021

Price Band - ₹ 303-306#

Face Value - ₹10

#Issue Size - ₹909 cr#

Bid Lot - 45 Equity Shares

Issue Type - 100% Book building

Post money Market cap of 7,805Cr - at upper price band; #at upper price band 

Share Reservation

Net Issue (%)

Promoter and Promoter Group

100.0

Public

0.0

Source: RHP

 

Company Background

Shyam Metalics and Energy Limited is a leading integrated metal producing company based in India (Source: CRISIL Report) with a focus on long steel products and ferro alloys. The company is amongst the largest producers of ferro alloys in terms of installed capacity in India, as of February 2021 (Source: CRISIL Report). It has the ability to sell intermediate and final products across the steel value chain. As of March 31, 2020, it is one of the leading players in terms of pellet capacity and the fourth largest player in the sponge iron industry in terms of sponge iron capacity in India (Source: CRISIL Report).

 

Object of the Offer

The IPO offer comprises a fresh issue and an offer for sale. Out of fresh Issue of ₹657cr, ₹470cr is proposed to be utilized towards repayment/prepayment of certain debt availed by the company and its subsidiaries.

 

Financials 

(Cr., unless specified)

FY18

FY19

FY20

9MFY21

Revenue from Operations

3,834

4,606

4,363

3,933

EBITDA

715

957

634

717

EBITDA Margin (%)

18.9

20.6

14.5

18.2

Diluted EPS ()

18.2

25.9

14.6

19.5

ROE (%)

22.89

24.27

12.04

13.89*

Gross Debt to Total Equity (x)

0.30

0.29

0.47

0.27

Source: RHP, *not annualized 

For additional information and risk factors please refer to the Red Herring Prospectus. Please note that this document is for information purpose only

Also Read: Upcoming IPOs in 2021

Key Points

Diversified product mix with strong focus on value added products

The company products primarily comprise of (i) long steel products, which range from intermediate products, such as, iron pellets, sponge iron and billets and final products, such as, TMT, customized billets, structural products and wire rods; and (ii) ferro alloys with a specific focus on high margin products, such as, specialized ferro alloys for special steel applications. The company also undertakes conversion of hot rolled coils to pipes, chrome ore to ferro chrome and manganese ore to silico manganese for an Indian steel conglomerate. The forward and backward integration of manufacturing plants has resulted in multiple points of sale across the steel value chain and provided with flexibility to sell intermediate products as well as use them for captive consumption, depending on the demand. This has resulted in a diversified product mix, which has reduced dependency on a particular product and de-risked revenue streams.

Strong financial performance and credit ratings

The company focuses on continuous efficiency improvements, improved productivity and cost rationalization has enabled it to deliver consistent and strong financial and operational performance. The company has a relatively better financial strength as compared to other companies operating in the long and intermediary steel sector. Revenue from operations increased at a CAGR of 6.56% from ₹3,843 cr in FY2018 to ₹4,363 cr in FY2020. Further, since the commencement of operations in FY 2005, the company has delivered a positive EBITDA in each of the Fiscals. As of March 31, 2020, the gearing ratio was one of the lowest amongst the competitors. In FY 2020, the interest coverage ratio was one of the highest amongst competitors (Source: CRISIL Report). The company has also obtained strong credit ratings. In particular, the company and its subsidiary, Shyam SEL and Power Limited, has received CRISIL A1+, CRISIL AA-/ Stable, and CRISIL A1+ rating from CRISIL for their short-term (bank facilities) rating, long-term (bank facilities) rating and commercial paper, respectively. In addition, the company and its subsidiary, Shyam SEL and Power Limited, has received CARE A1+, CARE AA-/ Stable, and CARE A1+ rating from CARE for their short term (bank facilities) rating, long-term (bank facilities) rating and commercial paper, respectively.

Experienced Promoters, Board and senior management team

The company is led by individual Promoters, Mahabir Prasad Agarwal, Brij Bhushan Agarwal and Sanjay Kumar Agarwal, who have several decades of experience in the steel and ferro alloys industry, and have been instrumental in the growth of the company. The company also has an experienced Board of Directors who has extensive knowledge and understanding of the metal industry and has the expertise and vision to scale up business. The chairman, Mahabir Prasad Agarwal, is responsible for strategic planning and overall administration of the company. The vice chairman and managing director, Brij Bhushan Agarwal, is responsible for implementing future growth strategies. The joint managing director, Sanjay Kumar Agarwal, is responsible for the entire production process at the manufacturing plants. The whole-time director Deepak Kumar Agarwal is responsible for the finance functions.

Key Risk

  • Loss of any of suppliers or a failure by suppliers to deliver some of primary raw materials such as iron ore, iron ore fines, coal, chrome ore and manganese ore may have an adverse impact on the company’s ability to continue its manufacturing process without interruption and its ability to manufacture and deliver the products to the customers without any delay.
  • The success of the company depends on stable and reliable logistics and transportation infrastructure. Disruption of logistics and transportation services could impair the ability of suppliers to deliver raw materials or the company’s ability to deliver products to its customers which may adversely affect operations.
  • The demand and pricing in the steel industry is volatile and are sensitive to the cyclical nature of the industries it serves. A decrease in steel prices may have a material adverse effect on the business, results of operations, prospects and financial condition.

* For complete list of risk factors kindly refer to the Shyam Metalics Red Herring Prospectus.

About 5paisa:- 5paisa is an online discount stock broker that is a member of NSE, BSE, MCX and MCX-SX. Since its inception in 2016, 5paisa has always promoted the idea of self-investment and has ensured that 100% operations are executed digitally with minimal to no human interventions. 

Our all-in-one Demat account makes investment hassle free for everyone, be it an individual newly venturing into the investment market or a pro investor. Headquartered in Mumbai, 5paisa.com - a subsidiary of IIFL Holdings Ltd (formerly India Infoline Limited), is the first Indian public listed fintech company.