Nomura has raised its target price for Lloyds Metals & Energy to Rs 2,050 from Rs 1,600. This implies an upside potential of approximately 14% from the current market price, while retaining a ‘Buy’ rating.
As per the brokerage report, strong quarterly performance, visible non-ferrous growth, superior growth relative to competitors, and many other factors led to raising the target price.
Let’s take a look at the key reasons why the brokerage house is bullish on this iron and steel sector stock –
Improving value-added product mix
According to the Nomura report, the company is shifting its earnings toward structurally higher-margin businesses. Specifically, pellet capacity is set to expand from 8MT (metric tonne) to 14MT by FY28, increasing its contribution to core EBITDA from 28% to 44% by FY30.
Additionally, downstream steel contribution is expected to rise to 33% by FY30 with the commissioning of new wire rod and HRC plants (Hot Rolled Coil manufacturing facility).
Visibility in non-ferrous growth
Nomura has gained “stronger conviction” in the company’s non-ferrous portfolio, which includes copper and cobalt assets in the Democratic Republic of Congo and Papua New Guinea. This segment is viewed as a meaningful second growth pillar that could contribute almost Rs 2,500 crore (or 14%) of consolidated EBITDA by FY29.
“Lloyds Metals and Energy has also secured strategic exposure to the Panguna copper-gold asset in Papua New Guinea, a potentially large but early-stage opportunity. It signed a non-binding agreement with Bougainville Copper Ltd that grants the company a 90-day exclusivity period to undertake due diligence,” said Nomura.
Significant upgrades to EBITDA estimates
Driven by stronger profitability across the mining value chain and an improved product mix, Nomura increased its FY27 and FY28 EBITDA estimates by 31% and 40%, respectively. It forecasted a differentiated EBITDA CAGR of 45% between FY26 and FY29.
Higher valuation multiples for key segments
Valuation multiples were increased for two specific business areas. The first one is the MDO (Mine Developer and Operator) business, which was raised to 8x EV by EBITDA value (from 6x) due to resilient cash generation. Lastly, the non-ferrous business, which was raised to 14x (from 12x), reflects improved earnings visibility.
Superior growth relative to peers
While the company trades at a premium valuation, Nomura argues this is justified by its “differentiated earnings growth.” On a growth-adjusted basis, Lloyds Metals screens favourably against domestic peers, supported by a projected improvement in Return on Capital Employed (ROCE) from 12% in FY26 to 16% by FY29.
Lloyds Metals’ share price performance
The share price of Lloyds Metals has risen almost 11% in the last five trading days. The stock has given a return of 6% over the past one month and raised investors’ wealth by a whopping 51% in the last six months. Lloyds Metals’ stock price has surged nearly 37% in a span of last 12 months.
Lloyds Metals Q4FY26
The company’s net profit came in at Rs 1,420 crore for the reporting quarter of FY26, compared to Rs 202 crore in the same quarter a year back.
Its revenue for the quarter was Rs 6,020 crore in Q4FY26, surging sharply from Rs 1,193 crore reported a year back.
On the operating front as well, it performed strongly, with EBITDA increasing to Rs 2,545 crore from Rs 261 crore in the year-ago period. The company’s margin expanded to 42.3% in the fourth quarter, compared to 21.9% in the corresponding period last year.