Shyam Metalics and Energy Limited (NSE: SHYAMMETL) Q2 2025 Earnings Call dated Nov. 08, 2024
Corporate Participants:
Pankaj Harlalka — Head of Investor Relations
Mr. Brij Bhushan Agarwal — Vice Chairman and Managing Director
Mr. Deepak Agarwal — Executive Director, Finance and Compliance
Analysts:
Unidentified Participant
Pruthul Shah — Analyst
Shaleen Kumar — Analyst
Rakesh Roy — Analyst
Nirav Shah — Analyst
Tushar Khurana — Analyst
Mudit Bhandari — Analyst
Mr. Sumeet Khaitan — Investor Relations partner.
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Q2 and H1 FY ’25 Earnings Conference Call of Shyam Metalics and Energy Limited hosted by Orient Capital. As a reminder, all participants lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Pankaj Harlalka from Shyam Metalics. Thank you, and over to you, sir.
Pankaj Harlalka — Head of Investor Relations
Thank you, Michelle. Thank you, ladies and gentlemen, for joining us in the call. I, Pankaj Harlalka, Head of Investor Relations at Shyam Metalics. Wish you all a very good afternoon, Shubh Deepawali, and a warm welcome to the second quarter FY ’25 post results conference call.
Before we delve into discussing the quarterly numbers, I hope you all had an opportunity to review our press release and the attendant investor presentation read along with the safe harbor statement, which are available under the Investors section of our website and the same are accessible in the BSE and NSE websites.
To discuss the second quarter and H1 results FY ’25, I’m joined by Mr. Brij Bhushan Agarwal, Vice Chairman and Managing Director; Mr. Deepak Agarwal, Executive Director, Finance and Compliance; and Mr. Sumeet Khaitan from Orient Capital, our Investor Relations partner.
Now I would like to invite Brij Bhushanji to provide his perspective on the performance of the second quarter of the current financial year. He will also provide his thoughts on our strengths and strategies of the future.
Thank you, and over to you, sir.
Mr. Brij Bhushan Agarwal — Vice Chairman and Managing Director
Very, very good afternoon. Wish you all a very Happy Diwali and prosperous year. Dear esteemed investors, analysts, we wish you and all my best wishes to the family of Shyam Metalics.
Since 2021, India has been the key driver of steel demand growth, and this trend is expected to persist. Steel demand in the developing world, excluding China, is projected to grow 4.2% in 2025, while we are holding steady with our strong growth projection for India, forecasting 7% to 8% increase in the demand over the next few years. This growth is driven by the expansion across all the consumed — steel consuming sector with infrastructure investment continuing to be the major contributor.
We have been growing at a steady pace over the last few years and have implemented fresh capacity from the internal accruals in the phased manner nearly every quarter. This quarter, we have announced the commencement of the coke oven plant in Jamuria, West Bengal. The new facility began production, reflecting a significant step forward in the company expansion goal.
This backward integration will enhance the company bottom line by reducing the cost and increasing control over the supply chain. We have also announced the Greenfield Cold Rolling Mill CRM in Jamuria, West Bengal. The mill will specialize in producing pre-painted galvalume coils and coil of galvanized iron/galvanized steel, GI/GL. This expansion is a very crucial step in our journey towards the value-added product.
Shyam Metalics, the Cold Rolling Mill will support housing, warehousing, industrial sheds, infrastructure, affordable housing through the initiatives such as PMAI. We already have a vast distribution setup, specifically in the Eastern India. Our plant is one of the few Eastern located plant in India, where there is a good demand of color-coated sheet, especially in the Northeastern region, hilly track region. We foresee a healthy contribution in our top line, bottom line from this facility to our company in the coming years.
We have commissioned a blast furnace of 0.77 million tonne capacity, a sinter plant of 1.1 million tonne in Jamuria. This facility will improve India’s steel production capacity. This development demonstrates our commitment to the encouraging industrial growth, creating employment and opportunities in this region.
To improve operational efficiency, the plant has an 18-megawatt top gas pressure recovery turbine, which contributes the 10% energy recovery, the specialized cooling system of water, which is — makes the plant more efficient and very, very competitive.
The furnace is designed with a zero process water discharge to optimize the process efficiency as a part of the organization growth strategy. In addition to the blast furnace, the company has commissioned the sinter capacity, to convert the iron ore fines to the feedstock of the blast furnace.
The brownfield expansion demonstrates Shyam Metalics’s strategic emphasis on increasing production efficiency, reducing the cost, improving the bottom line and top line. As Shyam, we understand high capex business and metallurgy, post our foray in the aluminum foil and stainless steel, which has facilitated us to emerge as a multi-metal company. Aluminum and stainless steel are the metal of future, and we see a tremendous growth in this metal alongside simultaneous growth in our Carbon Steel, Specialty Alloy business.
We have grown our capacity across numerous products at the CAGR more than 18% on our existing facility and product line. However, the focus has been on the value-added product where the revenue has grown at a CAGR of 43.2% in last five years. We expect to do well and to add more value-added products in the next few years.
We have announced the capex of close to INR10,000 crores since 2021, being an IPO year. We have already incurred a capex close to INR5,000 crores till FY ’25, which accounts for 50% of the total capex announced. Out of the incurred capex, more than INR2,600 crores has been capitalized, sweating to the assets, which has begun and contributing in the growth of the company.
In the Stainless Steel, we shall grow four-fold over the next five years from our existing capacity of 1.5 lakh tonnes to close to six lakh tonne capacity.
In Aluminum Segment and Specialized Oil And Products, we are planning to grow two-fold to 2.5-fold in the next five years, adding more multiple high niche product basket for the specialized application and increase our volume and will improve the bottom-line and the top line.
The Carbon Steel as well, we will further like to grow. And we would like to add the capacity close to 1.5 to 1.8-fold in next two to three years from 2.32 million to close to 3.6 million tonnes. The incremental capacity in the Captive Power Plant of existing 386 megawatts to 706 megawatts is being 1.8-fold growth, over the period.
If you see on the overall growth pattern, I would like to share that all these products, what we are doing is a brownfield expansion. And we are adding our existing capacity, which will help us to reduce our cost and help us to take more market share, as we are very much mature in major expansion what we are taking right now.
We look forward to maintaining the positive momentum, delivering continuous success in the upcoming year. Looking ahead, several upcoming project facilities are expected to begin operational in the current financial year, including the DRI, the stainless steel billet plant, the oxygen plant, the captive power plant, which shall both add value and increase the margin profile.
Thank you so much. Now, I would like to hand over to Mr. Deepak Agarwal, Director, CFO, to share a few more words on the financials and other growth. Thank you so much. Deepak, carry on to you.
Mr. Deepak Agarwal — Executive Director, Finance and Compliance
Thank you, sir. A very good afternoon, and Happy — Subh Deepawali to all the participants, I thank all of you for taking time out on this call, to discuss the results for the second quarter of the current financial year.
In India, a favorable monsoon is expected to boost the rural economy. As we move into the second half of the year, we anticipate an improvement in government capital expenditure, which was subdued in the first half due to elections and weather-related disruption.
A strong fiscal balance and robust tax collections should support ongoing capex spending.
The Indian Steel Association is actively engaging with the government to ensure a level playing field for the domestic industry.
RBI shift to a neutral stance is expected to be positive, potentially paving the way of interest cuts in the coming months. Thus, in turn, should stimulate investments and boost consumption across the country.
Now I would like to share a quick review of the reported consolidated financial for the second quarter under review for the financial year, 2024-2025. There has been a 23.6% revenue growth in quarter two of the current financial year, vice-versa quarter two of the last financial year. We have consistently cash positive with a net cash balance of INR1,099 crore in quarter two of the current financial year against the positive of INR1,338 crore in quarter one of the current financial year.
As you all aware that the 82% of our power sourcing from our captive power plant at a cost of INR2.47 per kW in quarter two of the current financial year, while our average power cost including the grid power at a INR3.04 per unit, this brings a huge delta to our EBITDA. In quarter two of the current financial year, on a consolidated basis, the company reported an operating revenue of INR3,635 crore, a growth of 23.6% over quarter two of the last financial year. The sales mix constitutes a high percentage of volume from finished steel, which accounts for 43% of the total revenue.
Our export is contributing 11% of our total revenue. The company has been able to book an operating EBITDA of INR407 crore with an increase by 32% over quarter two of the last financial year, and the EBITDA margin in quarter two of the current financial year was 11.2%. When we talk about the overall EBITDA for the quarter which was amounted to INR481 crore, that is because INR74 crore is generated through income from our treasury investments made in various government securities, so near bond, arbitrage funds, etc. Parallelly, in order to maintain the trend in EBITDA number, we have been judicious and cautious on all other cost components.
Our profit after tax for the quarter stands at INR216 crore, with a decrease of 55% on year-only basis. This is because of quarter two of the last financial year, the PAT was high owing to the adjustment of INR328 crore for the deferment of taxes, deferment of assets and the reversal of income tax provision which was made earlier on account of broad forward losses arising on acquisition of Mittal Corp Limited. Actually, we have a PAT positive if we compare with the quarter two of the current financial year to the quarter two of the last financial year. The PAT margin in the quarter is 5.9%, which is quite sound considering the current market trend and peer compression.
In Shyam Matt Group, our working capital management is very, very prudent. The group focuses mainly on selling either on advances or letter of trade basis, leading to lower debtors and inventory period of 15 to 20 days and 80 to 95 days, respectively. On the other side, we also booked majority of our purchases in LC considering our good credential. It help us in keeping the creditors also on check. I am also happy and glad to announce that recently, our credit rating has been further upgraded by CRISIL from AA stable to AA positive which is reposed the company’s credentials and confidence by CRISIL.
Certainly, the corrections in the steel prices did impact our profitability, causing decline in our EBITDA margin on a quarter-to-quarter basis, which is apart from the seasonal factor, local supply/demand imbalances, and policy impact, geopolitical and China export factory played a major role. Its aggressive export strategy, coupled with steel prices undercutting amid its own economic crisis is disturbing the global steel export dynamic.
Finally, the raw material prices in India have not corrected to that extent. The Indian steel prices remain under pressure on higher import and comparatively weak export. The domestic iron prices remain firm, while the price of [indecipherable] also fell.
In stainless steel and aluminum segment, our revenue per tonne has increased by 31% and 6%, respectively, on a quarter-on-quarter basis. We are on the consolidation phase in this segment as volume will increase in near term, margin will also further increase over a period of time.
At Shyam Metalics, we have always followed prudent capital allocation policy. We reinvest 70% of our total cash generated back into the business, retain 20% as a liquidity surplus and 10% to distribute to our steel shareholders as a dividend.
The policy shall facilate us to be cash positive even at the peak of our capex cycle. The above policy also ensure us with a steady other income comprising of income from our investments made in government survey bonds, ensuring timely capex implementation for our company.
As on 30th September 2024, the amount passed in government bonds and other liquid investments to the tune of INR2,165 crores, which will help also in going our upcoming project also.
A synopsis of capex and growth plan has been laid down in the investor presentation, and we are well on track to execute them as per the expected timeline. We look forward to maintaining this positive momentum, delivering continuous success in the upcoming quarters.
With this, I now open the forum for question-and-answer session. Thank you. Thank you to everyone.
Questions and Answers:
Operator
Thank you very much sir. We will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of — from ICICI. Please go ahead.
Unidentified Participant
Yes, hi, good afternoon everyone and thanks for the opportunity. First of all, congratulations for a good set of numbers in a very testing quarter. I have a couple of questions. The first one is on Aluminum division. Now, in case of aluminum, seeing that cost is increasing across the value chain, whether it is alumina — I know, of course, alumina, we don’t use and other raw materials such as scrap, etc, worldwide. Do you also see a similar cost escalation in our foil stock? And if so, do we see margins coming under pressure in Aluminum division in the coming quarters?
Mr. Brij Bhushan Agarwal
Thanks, Amit. I appreciate you understand the pressure of the second quarter. In spite of such a rough and tough scenario, we have been able to perform recently.
See, aluminum as a commodity in the business of foil and foil stock or alumina, that is different. But if you see the product variety, what we are manufacturing, we are manufacturing a very specialized quality, where we are exporting more than 50% in the Western world, be it U.S.A., Europe and all. And most of this product, what we manufacture is a specialized product. There has been a decent change in the scenario in the aluminum business because some imports which was coming in the country and there was some kind of a pre-import on the finished material has created more better margins in the country and demand. And the product what we are making, it has been — it is basically a converter where we buy foil stock and we convert into a specialized foil. So the margins have increased because there’s a shortage and the Europe market has opened, the demand is good. And I would say the business and the margin in the aluminum business is on the better trend side. If you see quarter-on-quarter basis, this quarter — this will be the last quarter, we have done fairly decent and better.
Unidentified Participant
Okay. That’s good, sir. The second question is on the — we have — we announced yesterday that we have commissioned the color-coated complex. So just wanted to know how much volume should we expect from this complex in this year? And from the commissioning of coke oven, what kind of cost benefits that we can see? And if you are seeing any pressure on marketing front as far as color coated is concerned?
Mr. Brij Bhushan Agarwal
We have just commissioned the plant. And I believe like in next few weeks, maybe by end of December, we should be able to be able to recently control and commercialize the complete operation properly. We expect that from the next quarter onwards, the December — January quarter onwards, we will be able to resume complete operation. And we expect that this year, we should be able to do a business of close to around 70,000, 80,000 tonnes.
Unidentified Participant
Okay. That’s good, sir. And the last one, if I can squeeze one more. We saw that the short-term borrowings have increased in this quarter. So any specific reason for that and whether we will see them coming back to our normal position going ahead?
Mr. Brij Bhushan Agarwal
Yes. See the short-term borrowing in the last quarter, that was decreased because of — if you see last quarter, we have raised QIP proceed has been received and which was repayment into the working capital. The increase in the working capital only because of that. And also, we are increasing our inventory to the tune of INR200 crores, including raw material advances.
Unidentified Participant
Okay. So this should actually be beneficial for you because now iron ore prices, we know where they are.
Mr. Deepak Agarwal
And also in the last quarter, if you compare with the last quarter, in the last quarter, there was a repayment of working capital out of the QIP proceeds received. That is the main reason…
Unidentified Participant
Okay.
Mr. Brij Bhushan Agarwal
The working capital from the March to September.
Unidentified Participant
Okay. Got it. Thank you so much and all the very best.
Operator
Thank you. [Operator Instructions] The next question is from the line of Pruthul Shah from Anubhuti Advisors. Please go-ahead.
Pruthul Shah
Yeah, sir, thank you for the opportunity. My question is with respect to the margin. So as you said that, currently in this quarter — current quarter was not good and we posted around 11% margin. So are we expecting Q3 and Q4 to remain in this range or we can expect some positive as positive EBITDA margin growth in next two quarters for the balance year?
Mr. Brij Bhushan Agarwal
Generally, if you see the trend of last so many years, quarter three is the end-of-quarter two and is the festive festival and we see like once generally after November onwards, we see there is some kind of a changes on the scenario. But yes, I don’t see that there is going to be major change in the present scenario. We should — the major change — it’s very difficult to determine on the numbers presently on the margins and all. We are determined only by the demand, supply and the price. So — but I feel it should remain decent, like in-spite of so much odd in the other results like the way we have performed, if you see the margins, if you see the volume growth, if you see everywhere we had been able to. I expect that this will add a good value, the new product — the new production will increase our margins and will increase our volume, increase our top-line as well.
So for us, we should be doing better on this fourth quarter. And third quarter is since it is we commissioned the plant and everything is getting stabilized. So we don’t see a major changes in the third quarter.
Pruthul Shah
Okay, sir. Got it. And sir, question with respect to our capital work-in progress. So currently around INR4,300 crore is in the capital work-in progress. So by end of this year, that is March 2025, how much amount we are expected to capitalize out of this INR4,300 crore?
Mr. Deepak Agarwal
Yeah. As far as capitalization is concerned, if you see in the last quarter, we are capitalizing coke oven plant and our CRM color coated plant. And this quarter, we are going to capitalize blast center plant and we expect that out of INR4,000 crore, INR800 crore we have already incurred in the first-half and we expect that another INR1,000 crore we will be incurred in the second-half of the current financial year.
Pruthul Shah
Okay. Okay, sir. Got it, sir. That’s it from my side. Thank you.
Operator
Thank you. We’ll take the next question from the line of Shaleen Kumar from UBS Securities India. Please go-ahead.
Shaleen Kumar
Yeah. Hi. Thank you, sir. Thank you for the opportunity and congratulations on a decent result given the tough environment. A few questions from my side. One on our color coated sheet. Any sense like what kind of EBITDA per ton we’ll be looking for to begin with or from the next quarter?
Mr. Brij Bhushan Agarwal
So in the color coated sheets, we expect an EBITDA because we’ll be buying HR from the market right now. We don’t have our own HR. So around INR3,500 goes there. So we should be making anything between INR5,500 to INR6,500. That is the expected line of EBITDA right now. That is when we go to the color coated. Right now, we are selling more of CR coils right now. So as we graduate to the color coated, that time we should be making around INR6,500.
Shaleen Kumar
And time line for us to graduate to the color coated?
Mr. Brij Bhushan Agarwal
Another 1.5 months.
Shaleen Kumar
1.5 months. So from next quarter onwards, we can assume, right, that we will be — we should — from the January quarter onwards, we should be in a position to sell color coated, right?
Mr. Brij Bhushan Agarwal
Right.
Shaleen Kumar
Okay. Okay. And with respect to — there’s too much pressure we could see on the carbon steel over here. I just want to ask you, I think partly you have answered, but how has been your October win? Like is it the same number, same kind of pressure you’ve been facing in October as well in terms of the profitability, EBITDA per ton?
Mr. Brij Bhushan Agarwal
October, we have seen some relief in terms of realizations. The prices have slightly moved up. And there have been a slight change even in the raw material prices. So I think in the second quarter, whatever the margin was around 11%. In the third quarter, we should be able to at least better that by 100 basis points.
Shaleen Kumar
Okay. Okay. Right. But in our third quarter, we also have these two things coming up, Coke Oven/coated sheet. So with that, so there’s a cost saving as well as new project as well. So how should we think about it on that front? So our sales will grow and our margin will also grow.
Mr. Brij Bhushan Agarwal
Yes, definitely, with the implementations of coke oven, blast furnace and sinter plant, the margin will definitely improve from the fourth quarter onwards. After stabilizing all the commissioning plant, it will be stabilized within this quarter, and we will definitely look into the improvement will happen in the fourth quarter onwards.
Shaleen Kumar
But deeply, then that will be on top of whatever the market think is, right? That’s because of the cost savings. Right?
Mr. Brij Bhushan Agarwal
Yes, yes, 100%.
Shaleen Kumar
So whatever Pankaj has replied 100 basis points likely improvement, that is not taking into consideration of the benefit of the coke oven blast furnace sinter plant, right? Or you’re including that as well.
Mr. Brij Bhushan Agarwal
Yes.
Shaleen Kumar
So that cost saving is on top of the market environment, better market environment in 3Q. is it right?
Mr. Brij Bhushan Agarwal
Yes, yes, very correct. Whatever the margins has been improved by 100 bps points in the October month, what Pankaj has spoke, there is a little bit improvement in the realization in the October month. With the implementations of blast furnace, coke ovens and color coated, our margin will definitely improve in the carbon steel because of implementations of blast furnace. It will be stabilized. We expect that it will be stabilized within this quarter and the margins with the implementations of blast furnace, you will get from the fourth quarter onwards. And as and when the realization will improve, definitely, our EBITDA margin will further improve.
Shaleen Kumar
Any ballpark estimate like what kind of a contribution? I don’t want to put you on a tight spot, but anything if you can range or something you can give us what kind of improvement you envisage with blast furnace coming in?
Mr. Brij Bhushan Agarwal
Let me take it over.
Mr. Deepak Agarwal
Yes. Hi, Shaleen.
Shaleen Kumar
Yes, sir.
Mr. Deepak Agarwal
Today, we are making steel. We are buying the pig iron from the market. And you are giving them the premium, the market is good, the logistic cost. And there’s a lot of advantage like we’ll be using it captively. Now whatever we will be producing now, we’ll be consuming around close to 30%, 35% captively. And since we have a railway siding, we have a power plant, we have a captive Coke Oven plant, our cost of manufacturing this hot metal pig iron is extremely competitive. And with the kind of design, the technology, what we have done it like the oxygen enrichment process, the PCI, the bell eye [Phonetic] stop, like these are all top level one automation. These are the top class design we have incorporated.
So once we are able to resume the plant completely, we expect that we should be able to increase around INR3,500 to INR4,000 per tonne EBITDA on the complete supply chain of this new project. Once everything is stabilized, we operate at 90%, 95%, everything is — we are using the gas for our pellet plant. The gas of the blast furnace is going to the pellet plant. We are using the Coke Oven gas in the CRM complex, where people are using the energy. We’ll be using our byproduct gas. A lot of combination, synchronization and the balancing of the product, byproduct, everything is going to — so it is definitely going to add good value in the time to come.
Shaleen Kumar
Sure, sure, sure. Sure, Bhushanji. Just moving ahead on to the aluminum segment. We were hearing about there is a possibility of antidumping duty on Chinese product in aluminum foil. Is there any update that you have heard about?
Mr. Brij Bhushan Agarwal
I think it has been filed, so there are some restrictions. I’ll not be able to share completely because my business unit head who handles this will be able to brief as on date what’s the status. But, yes, it is very much on the positive line. The import from the China is almost at a very, very slowdown or maybe it’s hardly people are doing a fresh import. So there is a good vibration and good energy in this business now.
Shaleen Kumar
Right, sir. And sir, if I can again ask you a little bit over here. Any status update on our battery foil, we were working with some of the battery manufacturers and what’s the status over there in terms of our allocation, etc?
Mr. Brij Bhushan Agarwal
The battery foil has been almost established. We have got all these tests and all done. We have signed the NDA, an agreement for a few battery manufacturers, which is coming up in the country. And once they commercialize the production in ’25, ’26, we expect that we’ll be participating with major battery suppliers in the country.
Shaleen Kumar
So probably in FY ’26, we should see that that’s coming in?
Mr. Brij Bhushan Agarwal
Yes, because we are all waiting for the battery to be…
Shaleen Kumar
Right. Okay. I have some bunch of other questions, but I’ll go back in queue sir. Thank you so much.
Mr. Brij Bhushan Agarwal
Thanks.
Operator
Thank you. [Operator Instructions] The next question is from the line of Rakesh Roy from Boring AMC, whilst Omkara Capital. Please go ahead.
Rakesh Roy
Yeah, hi sir. My first question regarding realization, if I see realization period compared to peers, our realization is very low. Why? Because if I see realization is down — is that 25,000 — 25,000, why is down compared to other peers in the same business line?
Mr. Brij Bhushan Agarwal
No, I have to check because it cannot be. Maybe if you are comparing the sponge iron prices in the Western India, which is a market, then it is different. Otherwise, it’s a very open commodity, and it is all — there cannot be a major change, maybe INR100 or INR200. If you can just share your information, I will be able to…
Rakesh Roy
Recently, I have — I hear from the — because [Indecipherable] because the iron and the sponge iron realization is very high. That’s why I asked this question.
Mr. Brij Bhushan Agarwal
So because they are in the — no, you are correct. Their area is a little in the Maharashtra and because they need to carry the cost and all from the raw material from the other part of the country. So it is on the little on the higher side, yes. But it cannot be INR1,000 maybe INR300, INR400 or maybe something like that.
Rakesh Roy
Its — more than INR1,000, sir. Okay, sir. Regarding sir, iron ore pellet sizes, if you see your pellet realization again compared to last Q1 is down by near INR1,000. So can we see same trend will go on in Q3 or this will bottom out, sir?
Mr. Brij Bhushan Agarwal
It all depends on the market demand and supply. You know, we — our — if you see the iron ore prices going down, the pellet price goes down. If you see the pellet price goes up, the iron ore prices goes up. So it all depends on what cycle are we calculating the numbers, the pricing. So there’s not a major change as of now, I would say, because the market is quite stable presently. But maybe we expect that we are still — we are able to share this number with such an odd situation where we are suffering from the geopolitical issues.
So much pressure is there in the metal industry. Still if you see the overall at a group level, overall product side, we are able to insulate with a lot of challenges, whether you beat the flat product or you beat any other sector of the carbon resource and all. So I expect that at this point of time it is a stability is there, not a major impediment. But in the time to come, we expect that from the fourth quarter onwards, we will see good improvement. So we just expect — I can’t say 1,000%, but yes, we are all very optimistic. Thank you.
Rakesh Roy
Okay, sir. Right, sir. Sir, my last question is regarding, sir, your assets. Earlier, you say you’re targeting near like INR1,500 crores for FY 2025, if I’m right? For full year revenue. So we are still just stick on that target.
Mr. Brij Bhushan Agarwal
[Foreign Speech]
Rakesh Roy
Sir, earlier you are saying you are targeting near by INR55 crores — near like INR1500 crores for SS — Stainless Steel revenue…
Mr. Brij Bhushan Agarwal
Correct.
Rakesh Roy
So we are still intact on that guidance, INR1,500 crores for FY 2025?
Mr. Brij Bhushan Agarwal
I think we should be close to between 80% to 90%.
Rakesh Roy
Okay.
Mr. Brij Bhushan Agarwal
I think because the market — the price correction has taken place in the stainless steel price also. If you see the numbers on the price and also, there is an impact on the revenue once you see the correction in the sale prices and all. But maybe close to around INR1,100 crores or so, maybe we should be able to close it. But again, I have to recheck and reconfirm you.
Rakesh Roy
Okay, sir. Thank you, sir.
Operator
Thank you. The next question is from the line of Nirav Shah from GeeCee Holdings. Please go ahead.
Nirav Shah
Good afternoon, sir and congrats on a good set of numbers in a challenging environment. Sir, two questions. Firstly is on the capex. We did mention in our opening remarks that the capex in the second half will be around INR1,000-odd crores, taking the full year capex to close to INR1,850 crores. But based on the current expansion plans and with some modifications adjusting for the cycle, how much do we expect to spend next year and in ’27 for the current expansion plan?
Mr. Deepak Agarwal
See, I’m saying, we have a very strong capital allocation policy. And if you see as Shyam Metallic Energy, we are a very, very diversified company where we have energy power plants are there, aluminum, stainless steel, carbon steel and all. On an average, we are targeting that we’ll be spending close to INR1,700 crores to INR1,900 crores every year, seeing the cash, seeing the strong allocation — capital allocation policy.
Nirav Shah
Okay. So our commissioning time lines will revolve around that. I mean, if our cash flows are faster, I mean, we’ll do more capex and…
Mr. Deepak Agarwal
Yes. Yes, yes, correct. Correct. We always review. You have seen that we have been always — we have been always very prudent in sharing our capex plan. And once one capex is done, we declare the second capex, third capex and all we always review quarter after quarter, see the cash, see the businesses and then we take up the matter there. So this is the way we operate, yes.
Nirav Shah
And sir, second question is on the specialty alloy side. I mean, for the last two quarters, we are seeing our profitability jump markedly from around INR12,000 to INR14,000 per tonne to INR20,000 per tonne. So is it primarily because of a mix change? Or I mean, is it sustainable now? I mean the base is now slightly higher than what we have been indicating in the past?
Mr. Brij Bhushan Agarwal
It is sustainable, but there has been a major correction in the European market because we export majorly in the European market, we have a big export. And the specialized alloy because of some changes in the international market, there has been some corrections. But as a product, it is very sustainable because you have your own captive power plant where we are generating at a very competitive price of around INR2, INR2.5 a unit. And we make a multiple products where we consume captively also. So this business is extremely sustainable. We don’t have to look back.
Nirav Shah
Got it. Got it. Great sir. Thank you, sir and all the best.
Operator
Thank you. [Operator Instructions] The next question is from the line of Tushar Khurana from Desvelado Advisory. Please go ahead.
Tushar Khurana
Hello sir. Thank you for the opportunity. I just have one question. What specific measures are being implemented to improve the utilization rates at Mittal Corporation? Are there any targets set for the next quarters?
Mr. Brij Bhushan Agarwal
See it’s a very, very micro management question, which I will not be able to answer you in detail, but briefly, I will be able to share. Please apologize for this. I would say, Mittal Corp, we acquired the plant last year, resumed the [Indecipherable] plant. Plant is under operation. We have introduced a lot of new grades in the stainless steel, which is a welding rods, wire rods, which is extremely very, very critical grade what we have been able to develop. We are now doing the order from the European market also. We are able to stabilize, because all the international company, they have a lot of criteria of approvals and all. So we are making a lot of new grades, and we are putting up a bright bar plant also downstream, wire plant also downstream.
In the time to come, you will see that we are planning from end-to-end solution, like there’s no company in the country presently who is making from ore to wires. Shyam Metalics is going to be a company by next year-end, where we will be able to make the fasteners, we’ll be able to fasteners grade rods, not fasteners, but wires, dry bulk, which is on the industrial application and which has a great export potential in the engineering segment and all. Thank you.
Tushar Khurana
Okay, sir. Thank you.
Operator
Thank you. We’ll take the next question from the line of Mudit Bhandari from IIFL Securities. Please go ahead.
Mudit Bhandari
Sir, just a confirmation, the number of capex that you said INR1,700 crores to INR1,900 crores is for the period from FY ’25, ’26, ’27 for each year? And secondly, is there any — what changes in working capital can be expected for the — as we are stabilizing and the expansion is going on. So considering that, what net debt number can be expected at around one year or two years down the line, net cash?
Mr. Brij Bhushan Agarwal
Yes, Mudit, as far as capex incurred for the next two to three years, the remaining capex is required is INR4,551 crores. Out of this INR4,551 crores in the next six months, we will be incurring INR1,000 crores, INR2,300 crores will be incurred in the year ’25, ’26 and remaining like INR1,200 crores will be incurred in the ’26.
When we talk about the working capital utilization, we will see with the commissioning of all our capex or something, definitely, the working capital will increase. But if you see in the past also, our average working capital utilization will be around 50% to 60% level, we will always be in the cash positive. So you will see it will be in between INR1,000-odd crores to INR1,200 crores or something average utilization for next one and a half year.
Mudit Bhandari
And expected net debt — net cash increase or decrease?
Mr. Brij Bhushan Agarwal
Net cash will always be positive.
Mudit Bhandari
Okay. Got it. Thank you.
Operator
Thank you. [Operator Instructions] Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Sumit Khetan from Orient Capital for closing comments. Over to you, sir.
Mr. Sumeet Khaitan
Yes. Thank you for connecting us on the call today. I would also like to thank the management for spending the time and answering all the questions today. We are Orient Capital, Investor Relations Advisors to Shyam Metalics and Energy Limited. For any queries, please feel free to reach out to us. Thank you, everyone.
Operator
[Operator Closing Remarks]