LGI Ltd (ASX: LGI) is an ASX small-cap stock that has had a strong run in 2025.
The company is engaged in the recovery of biogas from landfills, and the subsequent conversion into renewable electricity and saleable environmental products.
The company operates at the convergence of the waste and clean energy sectors.
At the time of writing, this ASX small cap stock has risen 47.26% higher in 2025.
Last month, the company announced a successful $50 million equity raise.
According to the company, the funds raised from the Offer will be used for:
- Accelerated delivery of High Conviction Projects in Execution, including expansions at Mugga Lane, Belrose and Nowra sites
- Funding new High Conviction Projects in Development, which are the next wave of power station expansion and grid-scale battery opportunities identified
- Enhancing balance sheet flexibility, providing capacity to pursue new projects and tenders as they arise, while maintaining prudent leverage
The team at Morgans has looked upon this news favourably, raising their valuation on the ASX small cap stock.
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Capital raising bumps up guidance
The broker said in a note yesterday that LGI has completed a ~A$56m capital raising (A$51m placement; A$5m SPP) to strengthen the balance sheet (net cash ~A$24m), expand its targeted development pipeline (>80MW) and accelerate project delivery (completed within 3 years).
Morgans said the extended pipeline (~28MW across six additional projects), will see LGI ~4x its ending FY25 MW under management, with a strong composition of high returning battery energy storage system (BESS) projects.
Subsequently, FY26 guidance has been reaffirmed for 25-30% growth.
The broker also materially improved forecasts (FY27-28F NPAT +17% and +24%), factoring in the development pipeline.
We are encouraged by the acceleration of the group's MW capacity build out and maintain our confidence in managements strong operational execution to deliver it on time and on budget. Strong forecast earnings growth (MorgansF ~26% EPS CAGR) and LGI's pure-play renewable exposure justify the valuation premium.
Upgraded price target for this ASX small cap
Based on this guidance, Morgans has upgraded its target price to $4.84.
This indicates an upside of 12.56% based on yesterday's closing price of $4.30.
Elsewhere, TradingView has a 12 month price target of $4.68.
