Llyod Metals Share Price Down 2% After Rs 1,218 Crore QIP Fund Raise

Shares of Lloyds Metals and Energy experienced a 2% decline after reaching a 52-week high of ₹774.90 on July 10. This followed the company's announcement of raising ₹1,218 crore through a qualified institutional placement (QIP).

Initially, the Lloyds Metals and Energy share price opened higher and reached their 52-week high but later declined due to profit booking, resulting in losses. By 10:41 am IST, Lloyds Metals' shares were trading at ₹742.35 on the NSE.

The company issued 1.75 crore shares through the QIP, pricing them at ₹696 each, which is a 4.93% discount to the QIP floor price of ₹732.08 per share. Quant Mutual Fund acquired nearly 30% of the total shares offered in the QIP, with other significant investors including Shamyak Investment and Authum Investment and Infrastructure.

Lloyds Metals intends to use the proceeds from the QIP to establish a 4 MTPA pellet plant in Konsari, Maharashtra, which will include an iron ore grinding unit to produce blast furnace and DRI grade pellets, as part of its forward integration strategy.

Furthermore, the company's board has proposed issuing 4 crore convertible warrants at ₹740 each on a preferential basis, pending shareholder approval at an upcoming EGM scheduled for July 29, 2024. Of these, 1.5 crore warrants will be allotted to promoters and the remaining to non-promoter entities. These funds will support the development of another 4 MTPA pellet plant, as well as additional DRI and power capacities at Chandrapur.

Rajesh Gupta, CEO of Lloyds Metals and Energy, outlined the company's plans to leverage steel capacity expansion in an interview with CNBC-TV18. The company aims to commence operations at its 1.2 million tonne plant in Chandrapur by July 2026, and is also setting up two pellet plants. The first plant is expected to start commercial operations by the end of FY25, followed by the second by the end of FY26.

Looking further ahead, Lloyds plans to establish a 3 million tonne plant in Gadhchiroli by 2028-29. Additionally, the company aims to increase its iron ore capacity from 10 million tonnes to 25 million tonnes, with enhanced capacity expected by the end of this year.

“The company also remains committed to maintaining its debt-free status, which will be supported by the recent fund raise to drive its capex cycle,” Gupta added.