Listing day strategy for Shyam Metalics and Energy

Shyam Metalics and Energy made a decent listing on the stock exchanges on June 24. Shares of the ferroalloy focused company opened for trading at Rs 380 on the National Stock Exchange, compared to the issue price of Rs 306, marking a premium of 24%. On the BSE, Shyam Metalics and Energy opened at Rs 367, at a premium of 19.93%.

In the afternoon trade, the share slipped a bit from its opening price to Rs 378. It swinged between an intraday high of/ Rs 399.10 and a low of Rs 367, on the BSE.

Hold or Sell?

Commenting on premium listing Saurabh Joshi Research Analyst at Marwadi Shares and Finance said “Investors who got allotment should continue holding the stock from medium to long term perspective as company’s products are used in housing, roads and capital goods which is a structural growth story. Also, we are in the middle of a super steel cycle as China who has more than 50% of global steel production capacity has become a net importer of steel indicating huge demand for steel.”

On the contrary market expert, Ambareesh Baliga is of the opinion that investors should book partial profits as the listing was better than expectations. There could be selling pressure on the counter as the cost of acquisitions for HNIs (high networth individuals) is high as it was oversubscribed about 340 times. While the remaining portion could be held for a year.

Three manufacturing plants

The Kolkata-based Shyam Metalics and Energy sells intermediate and final products across the steel value chain catering to institutional and end-use customers through 42 distributors, brokers across 13 states and one union territory.

It, currently, operates three manufacturing plants that are located at Sambalpur in Odisha, and Jamuria and Mangalpur in West Bengal.

Shyam Metalics and Energy Rs 909 crore IPO comprised fresh issuance of equity shares worth up to Rs 657 crore and an offer for sale to the tune of Rs 252 crore by existing shareholders.

The company intends to utilize the net proceeds of the fresh issue towards repayment and/or pre-payment, in full or part, of debt of the company and SSPL (Shyam SEL and Power), one of the subsidiaries amounting Rs 470 crore and balance towards general corporate purposes. Gross debt was Rs 886.292 crore at the end of 31 December 2020.

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