Lloyds Metals: Pellet Production to Surge 160%, Is it About to Enter a Super Growth Phase?

Synopsis: Lloyds Metals reported strong Q4 results with revenue up 406.9% YoY and sharp profit growth. The stock rose on FY27 guidance, highlighting ~160% pellet production growth and higher DRI output, signalling deeper integration into steelmaking.

The shares of a Large-Cap company specialising in fully integrated mining and steel manufacturing, primarily focusing on high-grade iron ore mining, sponge iron (DRI) production, and pellet manufacturing, are in focus following their Q4 results and their growth guidance.

With a market capitalization of Rs. 94,038.16 crores in the day’s trade, the shares of Lloyds Metals & Energy Ltd declined upto 2.46 percent, making a low of Rs. 1,721.00 per share compared to its previous closing price of Rs. 1,764.45 per share.

What Happened

Lloyds Metals & Energy Ltd,  engaged in fully integrated mining and steel manufacturing, primarily focusing on high-grade iron ore mining, sponge iron (DRI) production, and pellet manufacturing, is in the spotlight following their Q4 results and Guidance as follows:

Its Revenue from operations rose by 406.9 percent YoY from Rs. 1,182.6 Crores in Q4FY25 to Rs. 5,995.3 Crores in Q4FY26, and it rose by 22.1 percent QoQ from Rs. 4,909.3 Crores in Q3FY26 to Rs. 5,995.3 Crores in Q4FY26.

Its Net Profit YoY rose by 657.4 percent from Rs. 202 Crores in Q4FY25 to Rs. 1,530 Crores in Q4FY26, and on a QoQ basis, it increased by 40.4 percent from Rs. 1,089.5 Crores in Q3FY26 to Rs. 1,530 Crores in Q4FY26. 

The earnings per share (EPS) for the quarterly period stood at Rs. 26.77, compared to Rs. 3.91 in the previous year’s quarter. The company has also announced a final dividend of 100% (₹1 per share) for FY2025–26, subject to shareholder approval at the upcoming AGM.

Acquisition of Equity Stake in Papua New Guinea Entity

The Board of Directors of the Company approved the proposal for Lloyds Global Resources FZCO (“LGRF”), a wholly owned subsidiary of the Company, to acquire an equity stake in Lloyds Panguna Metals and Energy Limited (“LPMEL”) in Papua New Guinea. Pursuant to this acquisition, LPMEL will become a step-down subsidiary of the Company.

LPMEL will engage with Bougainville Copper Limited (“BCL”) to pursue long-term cooperation and mining arrangements in relation to the Panguna Mine in the Autonomous Region of Bougainville, Papua New Guinea. It will act as the dedicated vehicle for executing cooperation, MoUs, and joint venture agreements, and for holding any related rights, licences, or equity interests arising from the engagement.

FY27 Guidance

Lloyds Metals and Energy Limited has set a fairly aggressive FY27 operational guidance compared to FY26 actual performance, indicating a strong ramp-up across its mining and steel value chain.

Iron ore production is guided at ~26 MnT in FY27 versus 21.96 MnT in FY26, reflecting steady but meaningful growth of ~18.4%. This suggests incremental expansion of mining output, likely supported by higher evacuation capacity and improved operational efficiencies rather than a structural jump.

The more striking growth is in value-added segments. Pellet production is expected to nearly double to 7.75–8 MnT from 3.03 MnT in FY26, implying ~156%–164% growth, while DRI output is guided at 825 KT versus 484 KT, a ~70% increase. This clearly indicates a transition toward higher-value steel intermediates and deeper integration of its iron ore-to-steel chain.

Steel (WRM) production is a new or emerging segment with guidance of 0.15–0.20 MnT, so there is no FY26 base for comparison. This signals early-stage backward integration into finished steel production, though still small relative to its upstream operations.

Is it the Big Bet on Growth?

Pellet production is expected to rise to 7.75–8 MnT compared to 3.03 MnT in FY26, implying a sharp YoY growth of about 156%–164%. This is not a marginal increase but a near 2.6x jump.

This expansion also signals a strategic shift rather than just volume growth. The company is scaling up its value-added iron ore conversion capacity, moving from raw material dominance toward stronger integration in the steel value chain. Given that pellets are a key intermediate for steelmaking, this rapid expansion aligns with its broader push into DRI and steel production.

From a financial perspective, such a steep increase in pellet output is likely to have a disproportionate positive impact on revenues and EBITDA. Higher pellet volumes improve the capacity utilisation of downstream assets like DRI and steel, enabling better fixed-cost absorption and margin expansion. 

Company Overview & Others

Lloyds Metals and Energy Ltd (LMEL), based in Mumbai, is a prominent Indian mining and steel company known for operating the largest private iron ore mine in India at Surjagarh, Maharashtra. 

The company produces iron ore, sponge iron (DRI), and power, with substantial expansion plans to become a fully integrated steel producer. Key operations include mining in Gadchiroli and manufacturing in Chandrapur, with a major focus on sustainability and growth. 

In Q4FY26, Lloyds Metals & Energy Ltd’s revenue mix remained mainly driven by iron ore, with 72% coming from iron ore sales and 28% from value-added products (VAP). This indicates that raw material sales still form the bulk of earnings, but the rising contribution from VAP is a positive development, as it reflects a gradual shift toward higher-value, more profitable products that can enhance margins and reduce reliance on commodity-linked revenues.

These financial ratios suggest that Lloyds Metals & Energy Ltd is operating very efficiently and generating strong returns. A ROCE of 36.2% and ROE of 35.1% indicate that the company is highly effective at using both its capital and shareholder funds to generate profits, which is considered very strong in the metals industry.

The debt-to-equity ratio of 0.47 shows moderate leverage, meaning the company is not overly dependent on debt and maintains a relatively healthy balance sheet. A PEG ratio of 0.59 suggests the stock may be undervalued relative to its earnings growth, indicating potential value if growth continues as expected.

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