Earnings Call Transcript Analysis Report #
Lloyds Metals and Energy Limited - Q3 FY25 Earnings Call Analysis #
Date of Call: January 29, 2025 Date of Transcript Release: February 3, 2025
Financial Performance #
Key Metrics: #
- Revenue (9M FY25): Grew 11% YoY, driven by higher iron ore and sponge iron volumes.
- EBITDA (9M FY25): Grew 31% YoY, primarily led by iron ore and sponge iron segments.
- Iron Ore Realization (Q3 FY25): INR 5,894/ton (+8% YoY).
- Iron Ore Realization (9M FY25): INR 5,718/ton (+10% YoY).
- Iron Ore EBITDA/ton (Q3 FY25): INR 2,021 (+21% YoY).
- Iron Ore EBITDA/ton (9M FY25): INR 1,860 (+21% YoY).
- DRI Production (Q3 FY25): 78,000 tons.
- DRI Production (9M FY25): 239,000 tons.
- Capex (9M FY25): INR 2,700 crores.
- Total Capex to Date: INR 4,400 crores.
- Closing Iron Ore Inventory (Q3 FY25): 0.4 million tons.
Comparison: #
Strong YoY growth in revenue and especially EBITDA for the 9-month period, significantly outpacing revenue growth, indicating margin expansion primarily from the iron ore segment. DRI realizations were noted as “muted” in Q3 FY25, but margins were protected by captive ore. Power segment EBITDA impacted by muted prices. Q3 FY25 raw material cost as a percentage of sales was significantly lower (8%) compared to Q3 FY24 (21%), attributed partly to changes in coal consumption norms and stock verification adjustments in the previous comparable period.
Guidance/Forecasts: #
Reiteration of targeting 10 million tons iron ore dispatch for FY25, with potential upside if EC is received before March end. The company is “fully mobilized to mine and dispatch 25 million tons” post-EC approval. Expected Capex by FY25 end: ~INR 5,000 crores. Future Capex: INR 6,000-6,500 crores per year for the next two years.
Growth/Decline: #
Significant growth driven by the Iron Ore segment (volume and realization). Sponge Iron volumes grew, but realizations were volatile. Power segment performance was flat/muted. The sharp QoQ decline in DRI sales value (-48%) despite a smaller volume drop (-8%) was clarified as due to a one-time Industrial Promotion Subsidy (IPS) of ~INR 70 crores received in the previous quarter (Q2 FY25).
Strategic Initiatives & Business Updates #
Major Announcements: #
- Thriveni MDO Business Integration: NCLT process underway for demerger. Integration expected effective from April 1, 2025. Projected cost saving of INR 400-500/ton in iron ore mining.
Ongoing/Completed Projects: #
- Slurry Pipeline: 85 km completed, awaiting pellet plant readiness.
- DRI Plant (Ghugus) & 4 MTPA Pellet Plant: Nearing completion, commissioning/testing started. Expected operational by end Q4 FY25 or early Q1 FY26.
- Sponge Iron Plants: Recorded highest ever 9M production, operating at optimum capacity.
New/Future Projects: #
- 1.2 MTPA Steel Plant (Chandrapur): Designing complete, layouts ready, major equipment orders placed, EC applied for, land acquired.
- BHQ Beneficiation Plant: Pilot plant consistently achieving >66% Fe content and 37-40% yield (better than expected). Primary engineering complete, equipment procurement in progress. Land/legal formalities underway. Phase 1 (15 MTPA feed?) targeted for completion by FY27.
- Renewable Power (100 MW): Tie-ups with Hinduja and Amplus nearing final contract signing for captive consumption (26% equity stake model).
Operational Changes: #
Focus on cost competitiveness, including using local coal in DRI (impacting production slightly but improving cost). Shift towards integrated operations.
Market & Competitive Landscape #
Industry Trends: #
Acknowledged “dynamic and challenging market environment,” particularly volatile sponge iron prices. Noted Gadchiroli is being positioned as the “next steel city.”