Lloyds Metals And Energy Limited

Lloyds Metals reported robust financial results for Q2 FY26, with total income reaching INR25,754 million, marking a 75% year-on-year increase. For the first half of FY26, total income was INR49,838 million, up 28% YoY. EBITDA for Q2 FY26 stood at INR8,693 million, a 95% YoY surge, with margins expanding by 348 basis points to 33.75%. Profit after tax for the quarter was INR6,056 million, growing 22% YoY, reflecting the growing strength of integrated operations and value-added product contribution.

The quarter saw significant operational milestones, including the commissioning of the first pellet plant (4 million tons capacity) which achieved 100% utilization in October, producing over 350,000 tons. The slurry pipeline (85 km) has proven to be a major enabler, providing seamless and reliable evacuation, structural cost reduction, and lower carbon footprint. Additionally, a DRI expansion in Ghugus was commissioned, further strengthening the integrated value chain from mines to steel.

This was the first quarter where Thriveni's accounts were consolidated, contributing to the overall performance. Despite rain-related interruptions affecting volumes, Thriveni's underlying operations remained strong. The EC for iron ore products increased by 35-40%, and NTPC mines EC by 20%. The Surjagarh mine is also gearing up for full capacity from 10 to 26 million tons. However, the FY26 EBITDA guidance for Thriveni was revised downwards to INR2,000-2,200 crores from an initial INR2,800 crores due to delays in EC receipt and monsoon impact.

The company spent INR24,117 million on capital expenditure during H1 FY26 across various active projects. For the full FY26, capex is projected to be around INR4,500-5,000 crores, with INR6,000-6,500 crores planned for the next two years. To fund future growth, the company plans to raise INR9,500 crores through an NCD issue over the next six months. The aim is to maintain a debt-to-EBITDA ratio of 1, with a focus on lease debt and internal approvals.

The value-added product mix, particularly from pellets, is a core driver of profitability, with pellet EBITDA per ton at INR5,039. The company is exploring new markets for exports, including Europe, to mitigate steel cycle volatility. The 3 million-ton steel plant project is under re-study for its product mix and overall size, with groundwork expected to start in mid-to-end FY27. The first unit of the BHQ beneficiation plant is now expected to be commissioned in Q4 FY27, with a target output of 10 million tons by FY28.

The company recognized an IPS benefit of INR94 crores in Q2 FY26. Management expects IPS benefits of INR1,000 per ton for pellets and INR1,200 per ton for DRI, totaling INR350-400 crores annually, which will increase with new products. Efforts are underway to further reduce conversion costs by transitioning to LNG for fuel and increasing green power to 25-35% in the next six months, aiming for an additional INR100-150 per ton saving.