Shyam Metalics and Energy Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from Shyam Metalics and Energy Limited (SHYAMMETL) Q4 FY22 Earnings Concall

Q&A Highlights:

• Prashanth Kumar Kota from Dolat Capital asked about volume guidance across products. Brij Bhushan VC said that for sponge iron in FY23 the company is going to add close to around 0.4 lakh tons; Pellet, by Sept. ’23, SHYAMMETL will be commissioning 2.4 million ton. Ferro alloy is going to add 10,000 tons and  0.4, 0.5 lakh tons of long products.

• Prashanth Kumar Kota from Dolat Capital asked about realization of brands compared to Tata Steel, Jindal etc. Brij Bhushan VC said that every different region the prices are different, but in comparison with Tata Steel, SHYAMMETL must be around INR2,000-2,500 per ton, the difference must be that. But in comparison with the regular TMT manufacturer, SHYAMMETL prices are around INR3,000-4,000 net of all the marketing expense etc.

• Arijit Dutta from Kotak asked about Ramsarup acquisition, what additional costs can be envisaged as of now just to make the plants restart. Brij Bhushan VC replied that the capex is not going to be very large, because first focus of the organization will be to resume the operation by doing modifications. Doing preliminary calculation 3-3.5 years ago it was INR200 crores.

• Arijit Dutta from Kotak asked about the coal cost further going up and if it’s the market cost or the company’s coal cost that it mentioned. Brij Bhushan VC answered that it’s about the market cost. SHYAMMETL added that it is talking about the general perception.

• Amit Dixit from Edelweiss enquired about drivers of inventory doubling at the end of FY22. Deepak Agarwal ED Finance said that looking at financials, inventory level has increased from INR1,000 crores to INR2,000 crores, and it is mainly because of creating more inventory. In FY23 SHYAMMETL is enhancing its inventory level to some extent from last year and also the price of input is higher. That’s why inventory from last year is higher.

• Amit Dixit from Edelweiss enquired about working capital going ahead. Deepak Agarwal ED Finance replied that the company is always maintaining its working capital within the range of 50% of the average utilization. SHYAMMETL will be definitely keeping this range going forward.

• Abhijit Mitra ICICI Securities asked about the import the company is doing and how much is Coal India supplying. Brij Bhushan VC said that on an average, 35-40% the company is importing coal to meet its requirements.

• Saket Kapoor with Kapoor Company enquired about the utilization levels across the product portfolio, for 4Q22 and FY22. Brij Bhushan VC replied that on average SHYAMMETL is maintaining between 85% to 90% of utilization.