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Lloyds Metals and Energy Ltd is in the thick of things. Apart from signing a memorandum of understanding (MoU) with Tata Steel Ltd, the company acquired a 50% stake in Nexus Holdco FZCO, Dubai on 10 December. Nexus holds 80-90% stakes in several companies that have copper mining licences in an area spanning 100 square kilometres, and a copper processing plant in the Democratic Republic of the Congo. Slated for a June closing, the Nexus acquisition involves a cash payment of $55 million (about ₹500 crore).

“Prima facie the investment looks lucrative, considering current copper LME (copper traded on the London Metal Exchange) and global copper demand-supply dynamics," said an ICICI Securities report. However, the mining assets are not yet operational, and a quick buildout in the difficult region with a volatile political environment will be key for Lloyds.

Lloyds’ MoU with Tata Steel further boosts its iron ore mining business in Gadchiroli, Maharashtra, which is seeing increased activity with the waning of left-wing extremism. “While the MoU remains non-binding, the complementary capabilities of Tata Steel and Lloyds create meaningful strategic optionality for accelerated steelmaking capacity development, improved logistics efficiency and technology transfer," according to JM Financial Institutional Securities.

Among the important areas of collaboration are setting up iron ore beneficiation facilities, which are essential for enriching low-grade iron ore before it can be used in steelmaking. Notably, more than 80% of the 860 million tonnes (mt) of reserves for which Lloyds has a lease contain low-grade iron ore.

The company has environmental clearance (EC) to extract up to 55 mt of iron ore a year, of which nearly 30 mt will come from low-grade ore. Also, Lloyds’ upcoming steel plant could provide raw material to Tata Steel’s downstream units in Tarapur and Khopoli, Maharashtra. These units consume about 2 mt of steel a year and are currently supplied by Tata’s Odisha plant.

ICICI Securities expects Lloyds to report Ebitda growth of 114% compounded annually over FY25-27. Ebitda more than tripled to ₹1,040 crore in the September quarter (Q2FY26) thanks to the commissioning of a slurry pipeline and a pellet plant, and an increase in the EC limit.

Revenue grew almost 170% to ₹3,600 crore. Management has guided for iron ore mining of 20-22 mt in FY26, up from 10 mt in FY25. The expected commissioning of a second pellet plant and a 1.2 mtpa wire rod mill plant in FY27 should further boost earnings.

Valuations appear full, however. Lloyds’s shares are trading at an enterprise value of 9.6 times estimated FY27 Ebitda, as per Bloomberg. Investors will thus monitor the earnings trajectory in the coming quarters for further cues.

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