Shares of Lloyds Metals and Energy (LMEL) rallied 9 per cent to Rs 1,461, hitting a new high on the BSE in Friday’s intra-day trade on the back of over three-fold jump in trading volumes. In first three trading days of the calendar year 2025, the stock has rallied 19 per cent. In the previous calendar year 2024, it had more-than-doubled or zoomed 105 per cent, as compared to 9 per cent rise in the BSE Sensex.
In July 2024, the company allotted 17.5 million equity shares via qualified institutional placement (QIP) at Rs 696 per share. It raised ~Rs 1,218 crore from diverse investors (incl. long-only funds, mutual funds, insurance companies and other key stakeholders). The proceeds would be utilized for setting up the 4m-tonne pellet facility in Konsari, along with an iron ore and grinding unit.
At 02:15 pm; LMEL was trading 8 per cent higher at Rs 1,448.05, as against 0.8 per cent decline in the benchmark index. A combined 2.9 million equity shares changed hands on the NSE and BSE.
As on September 30, 2024, the promoters held 63.49 per cent stake in LMEL. Bodies corporate held 22.11 per cent stake, followed by retail individual investors (10 per cent) and mutual funds (1 per cent), the shareholding pattern data shows.
LMEL is the only iron ore miner in Maharashtra to boost one of the highest grade ores in the country.
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On Monday, January 1, 2025, LMEL said it has reported it’s highest-ever nine months (April to September)-ended iron ore production, to achieve an output of 8.6 million tonnes, which is an year-on-year (YoY) increase of 5 per cent.
The company's Direct Reduced Iron (DRI) production also reached 238k tonnes, reflecting a 22 per cent YoY growth. The DRI production has been witnessing strong traction, with December registering the best production numbers for the company ever. The DRI units are running at near full capacity utilisation rates, the company said in its 9MFY25 operational update.
LMEL is a DRI manufacturer and is the largest merchant iron ore miner in Maharashtra, India. It has a 340,000 TPA (tonnes per annum) capacity for DR across two districts in Maharashtra, and 34MW waste heat recovery based (WHRB) power plant. LMEL has a current capacity of 10 MTPA of iron ore at Surjagarh Village, Gadchiroli district in Maharashtra.
In the first half (April to September) of the financial year 2024-25 (H1FY25), the company’s revenue was up 26 per cent year-on-year (YoY), led by higher sponge and Iron ore volumes. Profit after tax (PAT) jumped 30.3 per cent YoY at Rs 301.30 crore.
Since FY22, the company has seen a turnaround in its fortunes. It has remained net debt-free with cash and equivalents of Rs 1,090 crore as of H1FY25. Future capex would either be funded via internal accruals, IPS receipt(s) or the war chest created by the company in recent months.
Last month, LMEL announced acquisition of 79.82 per cent stake in the Mining Development Operation (MDO) business of Thriveni Earthmovers Pvt Ltd (TEMPL) by subscribing to 700 mn equity shares worth Rs 70 crore in Thriveni Earthmovers and Infra Pvt Ltd (TEIL), which will become a subsidiary of LMEL on the completion of the said investment. TEIL and the MDO business of TEMPL are currently under the process of demerger, which is pending for approval from NCLT.
This acquisition will grant LMEL full access to TEIL’s MDO operations, providing potential opportunities to participate in future MDO projects. TEIL and the MDO business of TEMPL are currently under the process of demerger, which is pending for approval from NCLT.
With the acquisition of the MDO business, LMEL expects multiple benefits to come in a) cost savings over the next few years from ramping up the mining output from 10mnt to 25mnt given swift execution; b) strategic vision to execute an MDO order book of INR700bn+ over the next 15-18 years; c) potential revenue of ~Rs 27,000 crore and EBITDA of ~Rs 9,000 crore over FY26-28 from the MDO business, according to analysts at JM Financial Institutional Securities.
The company also plans to invest up to Rs 52 crore in renewable energy projects through SPV to secure 100MW of green power for captive consumption for its upcoming grinding unit, slurry pipeline and pellet plant with potential cost savings of ~Rs 100 crore annually, the brokerage firm said. However, currently the stock is trading above the brokerage firm’s target price of Rs 1,100 per share.
In line with enhancing iron ore capacity and multiple facilities coming on stream over the next 2-3 years, Anand Rathi Share and Stock Brokers expect revenue to reach ~Rs 18,700 crore. Considering the company’s strong dominance in Maharashtra and setting up of integrated steel plants, the brokerage firm expects margins to increase. Also, the company is setting up a slurry pipeline, which is expected to further drive the EBITDA margin.
“Considering its focus on integrating steel, expanding capacity and exemption from paying additional premium, coupled with strategic mine locations, ISP benefits, we expect a strong momentum ahead. We expect the company to outpace the sector, with a 65 per cent EBITDA CAGR over FY24-27,” the brokerage firm said in its initiate coverage report dated November 28, 2024. The stock was trading above target price of Rs 1,260 per share.