Lloyds Metals And Energy Ltd. announces a new order win

The approved project covers sponge iron/DRI capacity, not a separately quantified iron-ore mining addition.

• Iron-ore mining: No specific incremental capacity is stated in the board-approved expansion disclosure.
• Sponge iron/DRI: Ghugus adds 1,85,000 MTPA, and Konsari adds 22,400 MTPA, for a combined incremental capacity of 2,07,400 MTPA, or 0.2074 MTPA. The additions are planned within one year. ^[1]
• Estimated capex: Rs 140 Crores for Ghugus plus Rs 50 Crores for Konsari, totalling Rs 190 Crores. The projects are to be funded through internal accruals. ^[1]
• Relative to cash generation: FY26 consolidated operating cash flow was Rs 2,921.3 Crores. ^[2] Thus, the project outlay equals approximately 6.50% of FY26 operating cash flow, calculated as Rs 190 Crores divided by Rs 2,921.3 Crores.

The financial burden of this specific DRI expansion is therefore modest relative to the latest full-year operating cash flow, although the comparison excludes any separately announced iron-ore mining or broader steel-capex projects.

Confirmed terms: the allotted NCD tranche is Rs 700 Crores, carrying a fixed 9.02% annual coupon, with a 10-year tenor and maturity in August 2036. It is secured by an exclusive first charge through hypothecation over specified movable plant and machinery, with a minimum 1.25:1 security cover. ^{[3] [4]}

Pro forma consolidated impact

Assuming the NCD is incremental debt, with no refinancing, cash offset or equity change:

• Annual interest burden: Rs 700 Crores × 9.02% = Rs 63.14 Crores, derived from the issue size and coupon. ^[3]
• Gross debt: Rs 20,380.4 Crores currently ^[5] → Rs 21,080.4 Crores pro forma.
• Equity: Rs 13,870.9 Crores ^[6].
• Gross debt-to-equity: 1.47x currently ^[7] → approximately 1.52x pro forma. This is an increase of about 0.05x, or 3.4% relative to the pre-issue ratio.
• TTM interest coverage: reported at 9.83x ^[8]. Using TTM EBIT of Rs 7,583.3 Crores ^[9] and TTM finance costs of Rs 771.26 Crores ^[10], adding the NCD coupon gives:

`Pro forma interest coverage = 7,583.3 / (771.26 + 63.14) = 9.09x`

Thus, coverage declines by approximately 0.74x, or 7.5%, assuming earnings remain unchanged.

The latest quarterly interest-coverage ratio is 10.56x ^[11], but the TTM calculation is the cleaner measure for this exercise because the NCD coupon is an annual charge. The KPI series also appears to use different numerator conventions between the quarterly and TTM ratios; the pro forma calculation above uses the EBIT-based TTM measure, which reconciles to the reported 9.83x.

Issuer-only reference: on a standalone basis, gross debt-to-equity would move from 0.46x to approximately 0.52x, while TTM interest coverage would move from 25.62x to approximately 20.01x, using standalone TTM EBIT and finance costs. ^{[12] [13] [14] [15]}

The 23 June ESOP allotments add 121,863 shares, implying only 0.0217% dilution against the pre-allotment equity base—or 0.0216% on a post-allotment basis.

Dilution calculation

• ESOP-2024 allotment: 30,888 shares ^[16]
• ESOP-2017 allotment: 90,975 shares ^[16]
• Total allotted: 121,863 shares, derived from the two allotments above.
• Existing consolidated equity share capital: Rs 56.28 Crores ^[17]
• Face value: Rs 1 per share ^[18]
• Implied existing shares: 56.28 Crores, derived from the share capital and face value.
• Dilution: 121,863 / 56.28 Crores = 0.0217% of the existing equity base.
• Share capital increase: approximately Rs 0.0122 Crores, taking equity share capital to approximately Rs 56.2922 Crores, assuming all allotted shares are included in the reported capital base.

A separate 17,049-option ESOP-2024 grant should not be added to this dilution calculation because it was a grant, not an exercise or allotment; the report stated that no options had been exercised as of the grant date ^[19].

Exercise price versus historical pricing and book value

Implication: the share-count dilution is immaterial at roughly 2.17 basis points, but the Rs 4 exercise price is exceptionally low relative to the latest consolidated book value per share. The book-value comparison is an accounting benchmark, not a market-value comparison; it does not by itself establish the economic value of the options.