Multibagger stock Lloyds Metals & Energy surged nearly 5 per cent to its all-time high level on Monday, December 9, driven by a bullish outlook from brokerage firm Incred Equities.
The stock hit a new high of ₹1,099 in intra-day trading, reflecting investor optimism after Incred Equities initiated coverage on the stock with an ‘add’ recommendation and a price target of ₹1,476. The target represents a potential upside of around 40 per cent from the stock’s closing price on Friday, signalling strong growth expectations for the company.
Incred Equities is bullish on Lloyds Metals due to the strong demand for steel in India and the ongoing rise in iron ore prices, both of which are expected to positively impact the company’s growth prospects. The brokerage forecasts an iron ore deficit in India, driven by the unavailability of newly auctioned iron ore mines and the gap between available steel scrap and growing steel production. This supply imbalance is projected to lead to a shortage, which Incred expects to materialise by FY27 in its bear-case scenario.
As the supply shortage unfolds, iron ore prices are anticipated to increase, positioning Lloyds Metals to benefit directly from these price hikes. Incred Equities also forecasts a strong 76 per cent compound annual growth rate (CAGR) in earnings per share (EPS) for the company from FY24 to FY27, underscoring its optimistic outlook for Lloyds Metals in the coming years.
Stock Price Trend
Lloyds Metals’ stock has delivered multibagger returns to investors, surging by more than 110 per cent from its 52-week low of ₹522.40 in February 2024.
In the last year alone, the stock has advanced by 71 per cent, with a substantial 83 per cent increase in 2024 year-to-date. Notably, the stock has posted positive returns in 10 of the 12 months so far in 2024. In December alone, the stock has gained around 5 per cent, marking the seventh consecutive month of growth since June 2024. Between June and December, Lloyds Metals saw a remarkable 61 per cent rise, making it one of the top performers in the market.
On a longer-term horizon of five years, the stock has surged 13,600 per cent on the BSE.
Earnings and Other Developments
Lloyds Metals & Energy reported impressive earnings for the quarter ended September 2024, with its net profit rising by 30.30 per cent to ₹301.32 crore, compared to ₹231.25 crore in the same period the previous year. The company’s sales also saw strong growth, increasing by 25.03 per cent to ₹1,364.43 crore in Q2 FY24, up from ₹1,091.31 crore in the same quarter in FY23. These results reflect the company’s ability to successfully leverage market opportunities and continue its growth trajectory within a competitive sector.
In a move aimed at bolstering its growth, Lloyds Metals raised ₹1,218 crore through a qualified institutional placement (QIP) in June 2024. The QIP saw the issuance of 1.75 crore equity shares priced at ₹696 per share. The funds raised are expected to support the company’s expansion plans, including the establishment of a 4 million tons per annum (MTPA) pellet plant at Konsari, Maharashtra, along with an iron ore and grinding unit. The new plant is primarily focused on producing blast furnace and DRI-grade pellets, aligning with the company’s forward integration strategy and enhancing its production capabilities.
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