Top Broking Firms Assigned "Buy" On Two Midcap Metal Stocks Including PSU Stock For Upto 46% Gains

Two midcap metal sector stocks namely Shyam Metalics and Energy Ltd (SMEL) and Steel Authority of India Ltd (SAIL) gets "Buy" rating from two leading brokerage firms. SAIL is a Maharatna Category PSU stock under the ownership of the Ministry of Steel, Govt. Of India. Below are the key highlights of the stocks:

SAIL - Stock Outlook & Returns

Axis Securities has assigned a "Buy" on the stock of SAIL with a target price of Rs 93/share, implying a potential upside of upto 7% from its current level. The stock is currently trading at Rs 87.25/share on NSE.

The stock of SAIL today opened at Rs 85.45/share, currently trading 1.69% up from its previous close of Rs 85.80/share. Its 52 week high is Rs 112.35/share and 52-week low is Rs 63.60/share, respectively.

The stock has given 2.78% in the past 1 week, and 6.3% in the past 3 months. In the past 1 year, it has given 10.73% negative return. It gave the highest 103.04% positive return in the past 3 years. In the past 5 years, it has fallen 1.7%.

 

SAIL - Company Outlook & Guidance, Buy for a target price of Rs 93/share

According to the brokerage, Saleable steel sales volume guidance at ~4.8MT in Q4FY23. Capex guidance for FY23 at Rs 5,500Cr and Rs 6,500-7,000Cr for FY24. NSR improved in Jan'23, while some pullback is seen in Feb'23. Jan-Feb'23 coal consumption cost is expected to remain inline with Dec'22 cost or may increase by Rs 1,000-1,500/t over the Q3FY23 coal cost of Rs 25,500/t (for imported coal), but in Mar'23 coal cost is expected to rise by Rs 4,000/t.

Current Valuation: 4.5x EV/EBITDA on FY25E EBITDA (Earlier: 5.0x EV/EBITDA on FY24E EBITDA).

Current TP: Rs 93/share (Earlier TP: Rs 78/share)

The brokerage said, "We upgrade from HOLD to BUY on a less capex intensive phase for at least a couple of years, operations reaching rated capacity."

 

SMEL - Stock Outlook & Return

ICICI Securities has assigned a "Buy" on the stock of SMEL with a target price of Rs 425/share, indicating a potential upside of up to 46% from its current level. The stock's Current Market Price on NSE is Rs 291.35/share.

Today it opened at Rs 291.95/share, trading at 0.38% down from its previous close of Rs 292.45/share. Its 52 week low is Rs 273.10/share and 52 week high is Rs 385.50/share, respectively.

It has given 1.87% negative return in the past 1 week. It has fallen 3.14% in 1 month, 3.19% in the past 3 months and 11.24% in the past 1 year, respectively. It has fallen 22.46% since its listing on the exchange. It was listed on 24 June 2021.

 

SMEL - Buy for a target price of Rs 425/share

According to the brokerage, Shyam Metalics and Energy's (SMEL) Q3FY23 performance met our estimates. Key points: 1) Lower contribution from pellets and ferroalloys impacted profitability. 2) Rolled products volume grew 49% YoY (33% QoQ); 3) higher interest cost owing to iron ore fines inventory accretion at lower cost; 4) higher depreciation owing to the capitalisation of new capacities worth Rs4.9bn in Q3FY23; 5) 9MFY23 capex and debt at Rs9.7bn and Rs13.8bn, respectively. "Going ahead, we expect SMEL's margins to improve as thermal coal cost has peaked off and benefit of iron ore inventory at lower prices is likely to kick in. We value SMEL at 5x FY24E EBITDA resulting in an unchanged TP of Rs425. We maintain BUY on the stock and recommend it as one of our preferred picks in the ferrous space," the brokerage has said.

 

Disclaimer

The stocks have been picked from the brokerage reports. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.