MOIL - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, MOIL's net sales increased by 15.5% driven by higher volumes; however, its EBITDA fell by 19.3% yoy due to decline in manganese ore prices. We recommend a Neutral rating on the stock.

Higher volumes drive top-line growth: During 1QFY2013, MOIL's net sales rose by 15.5% yoy to Rs.243cr (below our estimate of Rs.283cr) mainly on account of higher volumes. Sales volumes grew by 42.5% yoy (+5.0% qoq) to 315,000 tonne; however, blended realization declined 16.4% yoy (but up 10.5% qoq) to Rs.6,940/tonne.

Margin shrinks due to lower realization: During 1QFY2013, the company's EBITDA decreased by 19.3% yoy to Rs.102cr while the EBITDA margin dipped by 1,814bp yoy to 42.2%, mainly on account of a decline in the prices of manganese ore. Other income increased by 20.4% yoy to Rs.52. Consequently, net profit decreased by only 8.7% yoy to Rs.99cr (above our expectation of Rs.93cr).

Outlook and valuation: After declining steadily since January 2011 manganese ore prices have stabilized over the past three-four months. MOIL's realizations improved sequentially during 1QFY2013 mainly aided by INR depreciation against the USD in our view. Going forward, although MOIL has raised manganese ore prices for 2QFY2013, we do not foresee further meaningful rise in prices in the coming one year. Hence, we recommend a Neutral rating on the stock.

Source : Equity Bulls

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