Company Update: Moil Ltd - BUY - TP Rs.260 - Kotak

- Driven by tight supply and restocking of the inventories, international prices of manganese ore has rebounded to multi-year high of over $7.5/dmtu (CNF India is at $8.5/dmtu). Backed by the firm international price, MOIL has further increased manganese ore price in April 2018 by 5-12% across all the grades, in addition to the 5-10% hike taken in the month of March 2018. Besides, firm international prices, lower supply from the domestic miners also supported the recent increase in the domestic manganese ore prices. The company reported highest ever turnover of Rs13 bn (provisional number) in FY18, supported by higher volume and strong realisation. In FY18, the company achieved a record production volume of 1.2MT (highest in last 10 years), up 19% YoY. The company is setting up 75,000 tonnes of Ferro alloy plants at an estimated capex of Rs 4.2bn. We have tweaked estimates, factoring buy back of 8.8 mn shares (3.3% of outstanding equity) and increased capex. Our revised earnings stands at Rs16.3 (earlier Rs15.6), Rs16.9 (earlier Rs16.7) and Rs19.6 (earlier Rs19.3) for FY18E, FY19E and FY20E, respectively. Given its strong business model, robust balance sheet with strong liquidity positions and its dominant position in the domestic market and further improvement likely in the manganese ore realisation, supports our positive stance on the stock. The stock is trading at attractive valuation of 4.6x FY20E EV/EBITDA. We reiterate our BUY rating, with a target price of Rs260.

Shares of MOIL LTD. was last trading in BSE at Rs.211.15 as compared to the previous close of Rs. 208.65. The total number of shares traded during the day was 20828 in over 478 trades.

The stock hit an intraday high of Rs. 212.7 and intraday low of 210. The net turnover during the day was Rs. 4407664.

Source : Equity Bulls

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