Shyam Metalics margin falls to 3.58% despite 20.66% profit growth
Costs grew faster than revenue and interest nearly doubled year on year, while a lower sequential tax rate supported net profit.
Filed 20 Jul 2026, 12:35 IST · Shyam Metalics & Energy Ltd (SHYAMMETL)
Key takeaways
- Consolidated operating margin fell to 3.58%, a third straight quarterly decline and 3.87 percentage points below the Industrials peer median.
- Revenue grew 23.45% year on year, but expenses grew faster at 26.89%, while interest cost rose 96.83%.
- Net profit rose 20.66% year on year and 12.58% sequentially, with other income contributing 10.04% of pre-tax profit and the sequential tax rate falling 6.47 percentage points.
Price around the results
Revenue growth did not translate into operating profit
Shyam Metalics reported consolidated revenue growth of 23.45% year on year and 4.10% sequentially, but operating profit fell 28.63% and 31.11%, respectively. Expenses grew 26.89% year on year and 6.11% sequentially, outpacing revenue in both comparisons. The company said Ramsarup Industries’ Phase I blast furnace, sinter and oxygen units were commissioned during the quarter.
Interest and depreciation added to the margin pressure
Operating margin narrowed 2.62 percentage points year on year and 1.83 percentage points sequentially because costs grew faster than revenue. Interest expense rose 96.83% year on year and 52.60% sequentially, while depreciation increased 29.50% and 6.58%, respectively. Other income was 10.04% of pre-tax profit, so reported profit also included a meaningful non-operating contribution.
The margin decline has now extended for three quarters
Operating margin fell from 6.85% in Q2FY26 to 5.89% in Q3FY26, 5.41% in Q4FY26 and 3.58% in Q1FY27. The company’s margin was 3.87 percentage points below the 7.45% median for the 11 Industrials peers that had reported, placing it third from the bottom. Net profit still grew because the sequential tax rate fell 6.47 percentage points; the year-on-year tax rate was nearly unchanged.
Expansion plans remain the main management narrative
Management said both phases of the Jamuria cold rolling mill, with capacities of 250,000 tonnes and 150,000 tonnes, had been commissioned, with total project capex of Rs 603 cr. The company said the aluminium division had incurred Rs 744 cr of its Rs 800 cr planned capex, and that Ramsarup Industries’ Phase I expansion involved Rs 747 cr of capex. Management also said upcoming projects were expected to be value and margin accretive, while its 2031 vision targets revenue of Rs 42,500+ cr, EBITDA of Rs 6,200+ cr and capacity of 27 MTPA.
The initial stock response was close to its usual results move
The stock gained 3.18% on the results date, with volume at 5.16 times its usual level; the move overlapped with a corporate action. Across the last eight results reactions, the stock rose six times and fell twice, with a median absolute move of 3.02%, making this response broadly typical for the company.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹5,455 cr | ₹5,240 cr | +4.10% | +23.45% |
| Other income | ₹47 cr | ₹29 cr | +61.16% | -12.16% |
| Expenses | ₹5,260 cr | ₹4,957 cr | +6.11% | +26.89% |
| Operating profit | ₹195 cr | ₹284 cr | -31.11% | -28.63% |
| Operating margin (%) | 3.58% | 5.41% | — | — |
| Interest | ₹78 cr | ₹51 cr | +52.60% | +96.83% |
| Depreciation | ₹265 cr | ₹249 cr | +6.58% | +29.50% |
| Profit before tax | ₹469 cr | ₹456 cr | +2.83% | +20.64% |
| Tax | ₹119 cr | ₹145 cr | -18.14% | +20.59% |
| Net profit | ₹351 cr | ₹312 cr | +12.58% | +20.66% |
| EPS (₹) | ₹12.60 | ₹11.20 | +12.50% | +20.57% |
Operating margin of 3.58% compares with a Industrials sector median of 7.45% across 11 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +3.18% | +3.57% |
| Next session | +3.93% | — |
Volume on the results session was 5.16× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Ramsarup Industries' Phase I blast furnace was commissioned along with its sinter and oxygen units.
Guidance & outlook
- The presentation targets revenue of ~Rs. 42,500+ by its stated 2031 vision.
- The presentation targets EBITDA of ~Rs. 6,200+ by its stated 2031 vision.
- The presentation targets capacity of ~27 MTPA by its stated 2031 vision.
- The company expects upcoming projects to be value and margin accretive.
Expansion
- The Jamuria greenfield cold rolling mill has total capex of ₹603 crore and Phase I and II capacities of 250,000 and 150,000 tonnes.
- Both phases of the Jamuria cold rolling mill, with capacities of 250,000 and 150,000 tonnes, have been commissioned.
- The aluminium division has total planned capex of ₹800 crore, with ₹744 crore incurred and ₹56 crore pending.
- Phase I expansion at Ramsarup Industries has capex of Rs 747 crore.
- The existing post-IPO capex plan amounts to Rs. 9,425 crore.
New initiatives
- Captive power plants use waste, rejects, heat and gas from operations to produce electricity.
What to watch
- Whether operating margin recovers from 3.58% after three consecutive quarterly declines.
- Whether expenses continue to grow faster than revenue after the 26.89% versus 23.45% year-on-year gap.
- Whether interest expense moderates after its 96.83% year-on-year increase.