Equirus reaffirms 'Long' call on Lloyds Metals, sees 65% upside; here's why

Equirus Securities has maintained a 'Long' call with an unchanged SOTP-based Mar'27 target price of ₹2,100 per share

Analysts at Equirus Securities remain bullish on Lloyds Metals and Energy (LMEL) and have maintained their 'Long' rating on the iron and steel manufacturer, citing that the company retains long-term cost leadership in iron ore and is evolving into a highly cost-efficient, diversified metals player with reduced earnings volatility through steel, pellets, MDO, and copper.

 

Strategic moves such as copper expansion and the Tata Steel partnership, according to Siddharth Gadekar, and Shivansh Singh, analysts at Equirus Securities, are strengthening LMEL’s growth visibility, reducing execution risk, and positioning it for stable, high-return cash flows as part of the global energy transition cycle.

 

 

Equirus Securities values LMEL on a sum-of-the-parts (SOTP) basis, assigning 9x EV/Ebitda to its standalone operations, 10x EV/Ebitda to the TEIPL (MDO) business, and 12.5x EV/Ebitda to its copper segment. The brokerage has maintained a 'Long' call with an unchanged SOTP-based Mar’27 target price of ₹2,100 per share. This target price implies a 65 per cent upside potential from the current market price of ₹1,272 per share.

Debt-led entry into CHEMAF; strategic resource access

The brokerage noted that Virtus Minerals’ acquisition of CHEMAF was structured around a significant capital infusion, including funding for stalled projects and the assumption/restructuring of existing debt, as per media reports. According to Equirus, this suggests that CHEMAF is a capital-constrained asset, with value creation dependent on execution and balance sheet repair.

 

The transaction is seen as part of a broader US-led initiative to secure critical mineral supply chains and reduce reliance on China, supported by the US–DRC strategic partnership framework.

LMEL builds DRC platform via VLMH

LMEL has acquired a 49 per cent stake in VLMH, a joint venture with Virtus Minerals (51 per cent), through its wholly owned subsidiary LGRF for $30 million. VLMH provides LMEL indirect exposure to CHEMAF. The asset base includes the Etoile facility (20ktpa copper, 4ktpa cobalt) and the Mutoshi expansion (50ktpa copper, 16ktpa cobalt), located in the Katanga Copper Belt.

 

“The transaction positions LMEL within a US-aligned critical minerals ecosystem, with the DRC accounting for over 70 per cent of global cobalt reserves and being a key copper-producing region,” said analysts at Equirus.  READ | HDFC Sec upgrades Eternal to 'Buy' on strong food delivery, Blinkit growth

Platform buildout with execution leverage

The brokerage further highlighted that LMEL’s strategy in the DRC is evolving into a scalable copper-cobalt platform, with two assets now in place (Exhibit 1). At peak, combined capacity could reach around 100ktpa copper and 20ktpa cobalt, alongside approximately 50mtpa mining volumes by Thriveni, driving product and geographic diversification.

 

“While the CHEMAF asset involves balance sheet repair, we view this as an opportunity for value creation, contingent on execution. Strong cash flows from the domestic iron ore business provide funding visibility for this expansion,” Equirus noted.

Key monitorables and risks

According to the brokerage, execution of the CHEMAF turnaround will be critical, particularly with regard to timelines for the completion and ramp-up of the Mutoshi project, as well as visibility on debt restructuring and funding requirements.

 

“Strategically, the acquisition enhances LMEL’s exposure to energy transition metals, where demand for copper and cobalt remains structurally strong,” said Equirus.

 

However, the brokerage has flagged several key risks, including execution slippages, higher capital intensity, balance sheet repair at CHEMAF, and geopolitical/regulatory risks in the DRC, along with commodity price volatility.   

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