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Lloyds Luxuries Ltd

| Q2 & FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤13th Nov 25

Summary : Lloyds Metals achieved record Q2 FY'26 results driven by pellet plant ramp-up and slurry pipeline efficiency, while navigating market softness and project delays.

Management Perspective positive : Management expressed confidence in operational achievements, stating the pellet plant 'crossed 100% of capacity' and the slurry pipeline is a 'market turning point'. They are 'very confident' in reaching revised Thriveni EBITDA targets and 'quite happy with the progress' of the pellet plant.

Concall Report Analysis & Insights

Business Overview

  1. Q2 FY'26 marked record revenue and margin expansion for the company.
  2. Pellet plant achieved 100% capacity utilization within four months of commissioning.
  3. DRI plant expansion was commissioned, strengthening the integrated production pathway.
  4. The 85-kilometer slurry pipeline significantly reduced costs and carbon footprint.
  5. Thriveni operations remained strong, contributing to consolidated business strength.

Future Growth Prospects

  1. Pellet plant number two and a 1.2 million ton wire rod plant are in advanced stages.
  2. BHQ beneficiation planning and procurement has commenced.
  3. Integrated 3 million ton steel plant project is being re-studied for optimal product mix.
  4. Mining operations in Odisha are set to increase with new projects and Surjagarh mine expansion.
  5. Conversion costs will be further reduced by adopting LNG and green power.

Management Insights

  1. Operational commissioning of the pellet plant was a central focus this half year.
  2. The slurry pipeline is a market-turning point for operational efficiency and cost reduction.
  3. Pellet business is a core profitability driver due to captive ores and cost efficiency.
  4. Revised Thriveni EBITDA guidance for FY'26 is INR2,000-INR2,200 crores.
  5. Committed to building a structurally low-cost, fully integrated, and responsible business.

Signs of Skepticism

  1. Thriveni's H1 EBITDA margin (16.5%) was significantly below the initial 33% guidance.
  2. Management did not fully explain the negative cash conversion on a consolidated basis.
  3. The BHQ beneficiation plant commissioning is delayed by 6 months from original schedule.
  4. Management expects only 2-3% market fluctuation despite current market softness.

Risk Factors

  1. Domestic iron ore prices are under pressure, and international prices are declining.
  2. The steel market cycle is currently weak, impacting realizations.
  3. Thriveni's EBITDA margin was lower than expected due to reduced production volumes.
  4. Negative cash conversion on a consolidated basis was noted.
  5. Delay in BHQ beneficiation plant commissioning due to land clearance and technology study.

Good To Know

  1. Q2 FY'26 total income was INR25,754 million, up 75% year-on-year.
  2. Q2 FY'26 EBITDA was INR8,693 million, up 95% year-on-year, with 33.75% margins.
  3. Q2 FY'26 PAT stood at INR6,056 million, an increase of 22% year-on-year.
  4. H1 FY'26 capital expenditure was INR24,117 million across active projects.
  5. IPS benefit recognized in Q2 FY'26 was INR94 crores.

Key Drivers

  1. Slurry pipeline reduces logistics costs.
  2. Pellet plant achieved full utilization.
  3. DRI expansion strengthens integration.
  4. New mining projects boost production.

Key Analyst Discussions

Competitive Environment

  1. Domestic iron ore prices are under pressure, while international prices are declining.
  2. India's iron ore pricing deviates from international trends, maintaining a premium.
  3. The DRI market is subdued, but coal prices are expected to rebound in 2-3 months.
  4. Company aims to be the lowest-cost producer, exploring exports to Europe, Far East, Middle East.

Market Trends & Consumer Behavior

  1. The steel market cycle is currently weak, impacting realizations.
  2. Extended monsoon across India affected mining volumes in Q2.
  3. Management anticipates an improved steel cycle by the time their steel plant commences operations.

Financial Highlights

  1. Q2 FY'26 showed record revenue and margin expansion, driven by pellet sales and slurry pipeline.
  2. Thriveni's H1 EBITDA was lower than projected due to reduced production volumes.
  3. DRI EBITDA per ton for Q2 was INR3,150, with H1 at INR3,879.
  4. Debt increased due to Thriveni consolidation and scaling operations, with INR9,500 crores NCD planned.
  5. Pellet margins are significantly higher than industry standard due to captive resources and cost efficiency.

Product Composition

  1. The integrated 3 million ton steel plant's product mix is being re-evaluated for flat and value-added products.
  2. Captive consumption for pellet and DRI plants is projected at 8 million tons and 1-1.2 million tons respectively.
  3. Open market iron ore sales are targeted at 18 million tons.
  4. Customer profile for iron ore and pellets remains stable, serving key domestic and export markets.

Strategic Considerations

  1. Iron ore selling strategy focuses on filling full EC capacity (20-22 million tons) balancing volume and realization.
  2. Thriveni acquisition provides integrated value, 5-star mine ratings, and modern equipment.
  3. Bharat Wire Ropes acquisition is a financial investment, not strategic, targeting 18-20% return.
  4. Mining expansion includes new projects in Odisha and Surjagarh capacity increase to 26 million tons.
  5. BHQ plant delay is attributed to land clearance and in-depth technology and engineering studies.
Lloyds Luxuries Ltd (LLOYDS) Concall Report Analysis & Insights | Dhanarthi