Metal stock to buy now for an upside of 27%; Recommended by Nomura

Synopsis: Industrial Minerals company is in focus as Nomura initiated a Buy rating with a ₹1,600 target, implying 27% upside, driven by strong Q3FY26 earnings, rising production volumes, diversification into steel and copper, and long-life iron ore assets supporting future growth.

The shares of the Mid-Cap company specializing in iron ore mining, the manufacturing of sponge iron (Direct Reduced Iron – DRI), and captive power generation are in focus as Nomura has initiated a Buy rating with an upside potential of  27 percent. 

With a market capitalization of Rs. 66,861.11 Crores on the Day’s Trade, the shares of Lloyds Metals and Energy Ltd jumped upto 0.2 percent, reaching a high of Rs. 1266.35 compared to its previous close of Rs. 1263.65.

What Happened

Lloyds Metals and Energy Ltd, engaged in iron ore mining, the manufacturing of sponge iron (Direct Reduced Iron – DRI), and captive power generation, is in focus after Nomura has initiated coverage with a “buy” rating on the stock with a price target of Rs. 1,600 per share, indicating a potential upside of 26.6% from its previous close.

Reason for the Buy Target

• Transformation into a Diversified Metals Player: Lloyds Metals and Energy Limited is transitioning from being primarily an iron ore miner to a more stable and diversified metals company. This shift reduces reliance on a single commodity and strengthens long-term business resilience.
• Strong Foundation in Low-Cost Iron Ore: The company benefits from low-cost iron ore assets with reserves expected to last until 2057. These long-life resources provide cost advantages, steady cash flows, and strong visibility for sustained operations.
• Expansion Through Vertical Integration: Lloyds Metals is expanding into steel production through vertical integration. By moving up the value chain from mining to steel manufacturing, the company can enhance margins, improve pricing power, and reduce earnings volatility.
• Stable Earnings from MDO Business: Its Mine Development and Operations (MDO) segment provides consistent and predictable earnings. This adds stability to overall revenues and balances the cyclical nature of commodity markets.
• Diversification into Copper: The company’s entry into copper further diversifies its portfolio. Copper exposure positions Lloyds Metals to benefit from rising demand linked to infrastructure development and energy transition trends.
• Strong EBITDA Growth Outlook: According to projections by Nomura Holdings, consolidated EBITDA is expected to rise sharply from ₹1,900 crore in FY25 to ₹10,900 crore by FY28, implying a robust 77% CAGR. This reflects strong volume growth and improved profitability across segments.
• Volume-Driven Earnings Growth: Managing Director Rajesh Gupta has indicated that production volumes across pellets, iron ore, coal, gold, and copper are set to increase significantly over the next year, which is expected to drive strong earnings momentum.

Nomura flags key risks, including delays in steel capacity addition, political unrest in the Democratic Republic of the Congo impacting copper operations, weaker-than-expected BHQ beneficiation outcomes versus pilot results, and a potential resurgence of Naxal activities affecting operations.

Financials & Others

Its Revenue from operations rose by 194 percent YoY from Rs. 1,670.82 Crores in Q3FY25 to Rs. 4,909.38  Crores in Q3FY26, and it rose by 39 percent QoQ from Rs. 3,540.65  Crores in Q2FY26 to Rs. 4,909.38  Crores in Q3FY26.

Its Net Profit YoY rose by 180 percent from Rs. 389.29 Crores in Q3FY25 to Rs. 1,089.56 Crores in Q3FY26, and on a QoQ basis, it rose by 92 percent from Rs. 567.39 Crores in Q2FY26 to Rs. 1,089.56 Crores in Q3FY26. The earnings per share (EPS) for the quarterly period stood at Rs. 19.87.

The segment revenue shows strong growth across all categories in Q3. Mining revenue increased from Rs. 1,474.61 crores in December 2024 to Rs. 2,781.03 crores in December 2025. Steel and related value-added products surged from Rs. 260.95 crores to Rs. 1,549.17 crores, while MDO operations and related services rose from Nil to Rs. 2,198.22 crores. Overall, total segmental revenue nearly quadrupled, climbing from Rs. 1,735.56 crores in December 2024 to Rs. 6,528.42 crores in December 2025.

Lloyds Metals & Energy Ltd (LMEL), established in 1977 and based in Mumbai, is a leading, integrated Indian mining and steel manufacturing company. It specializes in iron ore mining (with a key, long-term lease in Surjagarh), sponge iron (DRI) production, and captive power generation in Maharashtra. The company is aggressively expanding into a major, low-cost steel producer. 

In Q3-FY26, production increased across all key minerals compared to Q2-FY26. Iron ore rose sharply to 15.63 Mn tonnes from 8.35 Mn tonnes, baryte edged up slightly to 2.01 Mn cubic meters from 1.97 Mn, and Indian coal grew significantly to 27.02 Mn cubic meters from 16.87 Mn, and overseas coal also increased to 9.88 Mn cubic meters from 8.41 Mn.

The company has demonstrated strong financial performance, with a ROCE of 38.3% and a robust ROE of 31.4% (46.2% over the past 3 years). It has also delivered impressive profit growth, achieving a 115% CAGR over the last five years.

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