Lloyds Metals & Energy Ltd’s shares have gained about 14% so far in 2025 in the backdrop of its quarterly update and announcement of employee stock options (Esops) for its 6,000 workers.
For the December quarter (Q3FY25), the company’s iron ore production is up 8% year-on-year, higher than the 3.5% growth clocked in half-year ended September (H1FY25). Volume growth, along with the price increase of ₹800-900 per tonne taken during the quarter, should boost profitability.
The issuance of Esops, worth over ₹1,400 crore at the current market price, carries significance given the disruption faced by the iron ore miner until some years ago due to its presence in the Maoist-affected region of Gadchiroli in Maharashtra.
In December, Lloyds announced the acquisition of mining development operations (MDO) of Thriveni Earthmovers. A J.M. Financial Institutional Securities report estimates Thriveni’s MDO business could have an Ebitda potential of about ₹2,000 crore a year. The acquisition should also help Lloyds in faster ramp up of its mining capacity to 25 million tonnes per annum (mtpa) from current 10 mtpa. The company has sought regulatory approval for this and expects to get it by February.
Lloyds has increased its iron ore production by 3.6 times during FY22-24, which has helped its profitability. Ebitda growth stood at 37% in H1FY25. Also, the company is working on reducing its cost of operations, improving realization and forward integration.
This strategy includes construction of a beneficiation and pelletisation plant, to be completed in phases starting March. The management has indicated that this would generate a premium of $40-50 per tonne ( ₹3,400-4,300) against an additional processing cost of ₹800 per tonne. It has also completed an 85 km slurry pipeline which would lower the iron ore transportation cost by about ₹600 per tonne.
Lloyds is venturing into steel making by constructing a 3 mtpa plant, with the first phase expected to be completed by September 2026. An Anand Rathi Share and Stock Brokers report projects the company’s Ebitda to grow at 65% CAGR during FY24-27.
Lloyds has guided for a capex of 3,500 crore in FY25, doubling to ₹7,000 crore in FY26. Its net cash position stood at about ₹2,000 crore as of September-end.
The stock has appreciated over 140% in the past one year amid strong profit growth and outlook. Valuation is stretched. The stock trades at an enterprise value of 10.6x FY26 estimated Ebitda, as per Bloomberg data. Delays in approval for mining expansion or project execution can further hurt profit projections.
