The average target price of LLOYDSME.NS is 1604 and suggests 34% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 1905.0. This translates into 59% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 1570.0. This suggests 31% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Lloyds Metals and Energy Limited manufactures and sells sponge iron products in India. The company operates in three segments, Sponge Iron, Power, and Mining. It also offers direct sponge iron; and by-products, such as char, fly ash, ESP dust, bed materials, and iron ore fines. The company is involved in the generation and distribution of power. Lloyds Metals and Energy Limited was incorporated in 1977 and is based in Mumbai, India.

India

Lloyds Metals and Energy Limited

Basic Materials

The company pays dividends on rare occasions. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. 

LLOYDSME.NS reported revenue of INR 70 068mn in the last 12 months, up 20% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 20% from FY23 to INR 29.98. Market expects EPS to reach INR 31.70 in FY25.

The stock has been growing steadily in the past six months, adding 22% in total. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 30ppts over past six months and grown 4ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 30.9% in the last 12 months, up from 25.6% in FY23. 

Historically, LLOYDSME.NS has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 21.8%, a growth from 21.1% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 34.3%, above the peers. 

Lloyds Metals and Energy Limited reported a return on equity (RoE) of 35.5% in the last 12 months, down from 56.9% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 27.4% in the last 12 months, a decrease from 41.4% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 5.7 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

LLOYDSME.NS has average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually quite stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, solid return on capital, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, poor working capital management.

In highly turbulent market conditions, LLOYDSME.NS is not volatile. In other words, the stock will fall far less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be very low. 

In normal market circumstances, LLOYDSME.NS is not overly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will remain relatively stable. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to minimal. We would also like to highlight the minimal intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, overpriced on P/FCF. 

Lloyds Metals and Energy Limited

₹ 1227.5

4

Lloyds Metals and Energy Limited

₹ 1227.5

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₹ 1227.5

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