Buy Lloyds Metals and Energy; target of Rs 1260: Anand Rathi

Anand Rathi's research report on Lloyds Metals and Energy

The only iron ore miner in Maharashtra, Lloyds has ~157m tonnes of extractable iron ore and ~701m tonnes of banded hematite quartzite (BHQ). It has environmental clearance (EC) for 10m tonnes, which is being enhanced to 55m tonnes (25m tonnes of usable ore). It is growing its presence across the steel value chain and has earmarked ~Rs327bn for setting up integrated steel facilities in Ghughus and Konsari. The mine, which was awarded via allocation route, boosts one of the highest qualities of iron ore reserve, with low silica-alumina content. Considering the company’s focus on integrating the steel value chain, increasing capacity, exemption from paying additional premium, strategic mine locations near steel manufacturing hubs of nearby states, we expect a strong momentum ahead.

Outlook

We expect the company to outpace the sector, with a 65% EBITDA CAGR over FY24-27. We initiate coverage on the stock with a Buy and a sum-of-parts TP of Rs1,260

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