Global brokerage firm UBS maintained its bullish outlook on in its recent note, expecting the stock to rise another 40% from current levels, even as it has gained 26% so far this year.
It has retained its ‘buy’ rating on the stock with a target price of ₹1550, indicating an upside potential of 45.25% from the stock’s Wednesday closing price of ₹1067 apiece, as it believes the market does not fully appreciate management’s execution track record, diversification benefits, and efficient operations.
In terms of valuations, the brokerage pointed out that the stock trades at 7.5x one-year forward EV/EBITDA, in line with the three-year average, leaving room for multiple expansion.
Three key factors behind UBS’ bullish view
In its note, the brokerage highlighted three key reasons for its strong outlook: disciplined capital allocation, superior project execution, and efficient operations—the key differentiators for a commodity company.
UBS’ review of completed and upcoming projects indicates that Shyam delivers capex at a lower cost and with shorter timelines than industry averages, supporting superior ROIC and faster growth.
Driven by its new capex plan and increasing focus on value-added products, UBS forecasts EBITDA per tonne to improve from ₹4,700 in FY26 to ₹8,400 by FY31, implying a 24% EBITDA CAGR in FY26-31E, versus 12% in FY21-26.
With a faster ramp-up of new capacity and the transition to higher-value-added products, UBS has raised its FY28/FY29E EBITDA estimates by 3%/8%, which are 8%/6% above consensus, respectively.
Shyam Metalics to accelerate earnings growth
UBS now anticipates that the company can accelerate earnings growth over the next five years, citing a shift in its product mix towards higher-value segments such as stainless steel, CRM, aluminum, SBQ, and railway wagons, while reducing its dependence on low-margin intermediates.
Notably, the brokerage’s expectation of strong earnings acceleration comes even as the company embarks on a large capex plan, which it will fund through internal accruals and existing cash. Its analysis indicates that Shyam’s capex project costs are 10-20% lower, with timelines also significantly shorter than industry standards.
The company’s successful foray into new products in the aluminum foil and stainless steel segments suggests timely capitalization of new projects.
UBS also believes the company can better navigate commodity cycles than its peers. It believes the company’s strength lies in efficient operations through vertical and horizontal integration, as well as its best-in-class cost and time execution when building capacity.
Trading at 7.5x one-year forward EV/EBITDA, in line with the three-year average, UBS believes consensus is not factoring in the capex ramp-up and the shift in revenue mix. This leaves scope for consensus earnings upgrades and for the valuation to catch up with peers, the brokerage said.
Stock is on track for fourth-year gains
The shares have been marching higher in 2026, even as sentiment in the broader market was hit by rising geopolitical uncertainty. If the stock closes the current year in positive territory, it will mark the fourth straight year of gains. Over the last five years, the stock has delivered a cumulative gain of 141%.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.