Shyam Metalics Q3 Volumes Mixed, Shares Dip on Tuesday Update

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AuthorRiya Kapoor|Published at:
Shyam Metalics Q3 Volumes Mixed, Shares Dip on Tuesday Update
Overview

Shyam Metalics and Energy Limited reported a mixed operational update. December stainless steel volumes surged 19.1% year-on-year, but Q3 sequential volumes declined 9.9%. The company saw varied performance across other segments. This follows a Q2 where net profit plunged over 70%. Shares dipped following the announcement.

The stock of Shyam Metalics and Energy Limited faced pressure on Tuesday, January 6, following the company's release of its operational performance update for December and the third quarter. While December saw significant year-over-year growth in several key segments, the sequential performance for the third quarter presented a mixed picture, dampening investor enthusiasm.

December Performance Highlights

The company reported a substantial 19.1% year-over-year increase in stainless steel sales volumes for December, reaching 9,393 tonnes. This volume-led growth was complemented by a 18.2% rise in average realisations from the previous year, pushing prices to ₹1.45 lakh per tonne. Speciality alloys also demonstrated strong momentum, with December volumes jumping 50.1% annually. Furthermore, the CR coil and CR sheets segment experienced a surge, with volumes increasing over eight-fold year-on-year, boosted by the commissioning of the new colour-coated plant at Jamuria. Pig iron volumes rose 45.5% annually, and HR tubes and pipes saw good traction, with volumes up 25.9% from the previous month. Sponge iron volumes also posted a healthy 19.5% annual gain.

Q3 Sequential Trends and Challenges

Despite the positive December figures, the third quarter presented sequential challenges. Stainless steel volumes declined by 9.9% quarter-on-quarter, although realisations improved by 8.4%. Pellet sales volumes fell 1.95% year-on-year and 16.72% from the previous month, even as realisations saw modest increases. Carbon steel volumes were down 3.3% sequentially, with realisations also lower. Pig iron volumes experienced a sharp 17.7% sequential decline. The company attributed these divergent trends to the product mix and prevailing market conditions, noting stronger traction in value-added products like stainless steel and speciality alloys, while intermediate segments faced pressure.

Profitability Concerns Lingering

The operational update comes after the company reported its second-quarter results, which revealed significant profitability erosion. For Q2, Shyam Metalics saw its net profit plummet by over 70% compared to the same period last year. This downturn was attributed to higher raw material costs and a substantial jump in other expenses, which led to a sharp decline in EBITDA margins from over 25% to 7.9%, and an overall 61% year-on-year drop in operating profit (EBITDA). While the December operational update shows volume recovery in specific areas, the profitability context from Q2 casts a shadow over the company's immediate financial outlook. As of 11:19 am, shares of Shyam Metalics and Energy Limited were trading 1.27% lower at ₹835.05.

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