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  • Stock recommendation: MOIL Ltd – BUY – TP Rs.260

    Publish date: August 13, 2018

    Result Update

    MOIL Q1FY19 numbers were above our estimates, driven by better than expected realisation. However, volume during the quarter declined and was lower than production, resulting in a build-up in inventory. MoIL has revised its prices upwards in the month of July, benefit of the same will flow in 2QFY19 onwards.

    Key Highlights

    • Manganese ore shipments declined 20.8% YoY and 24.8% QoQ to 243kt (production volume stood at 324kt). This, offset the benefit of higher realisation. Blended realisation during the quarter stood at Rs12,258/tonne. Management has guided for a 10% increase in ore volume for FY19E.
    • The cost during the quarter declined sequentially due to decline employee costs, as last quarter numbers includes impact of actuarial adjustment.

    Valuation & Outlook

    • Manganese ore outlook remains positive with the strength in international steel prices and firm domestic demand led by higher steel production. Given its strong business model, robust balance sheet with strong liquidity positions and its dominant position in the domestic, supports our positive stance on the stock.
    • At CMP, the stock trades at 10.1x/9.0x FY19E/FY20E earnings and on EV/EBITDA, it trades at 4.1x/3.1x FY19E/FY20E EBITDA. We reiterate our BUY rating on the stock with an unchanged target price of Rs260.


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