Showing posts with label MOIL. Show all posts
Showing posts with label MOIL. Show all posts
10 September 2013
02 September 2012
MOIL: Buy ::Business Line
MOIL is a solid franchise with the wherewithal to ride out tough times.
Public sector manganese ore miner MOIL has had a poor run on the bourses. The stock has lost nearly 17 per cent over the last couple of months, and almost 50 per cent since the beginning of 2011.
This was mainly due to the sharp dip in global manganese ore prices — a fall-out of escalating concerns about the world economy and excess supplies.
30 May 2012
13 May 2012
MOIL - BUY :: Business Line,
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Investors could consider buying shares in manganese producer MOIL. Attractive valuations after the sharp dip in share price over the last year, and the company's plans to double output makes for a compelling investment case.
The company's enterprise value (EV) discounts its trailing 12-month operating profits by 4.3 times. This is at a discount to earlier levels and does not fully capture the company's dominant domestic market position and low-cost operations. The cost advantage along with cash reserves of around Rs 2000 crore and zero-debt status provides the company an edge over competition and gives it sufficient headroom for expansion plans.
REALISATION DROP IN 2011
MOIL provides roughly 40 per cent of India's over two million tonnes of annual manganese requirement. About 90 per cent of this is used by steel-makers who produce ferro-alloys to toughen up their steel products. Manganese consumption moves lock-step with steel consumption.
In the calendar year 2011, global manganese production rose by around nine per cent. This was higher than the 6.8 per cent growth registered in global steel consumption. The excess production weighed on global manganese prices. High inventory build-up in China, coupled with a supply glut from geographies such as South Africa and Indonesia, impacted prices. By end-2011, manganese prices had slipped by 40 per cent from the start of the year.
MOIL's sales and profits for the nine months ended December 2011 have shown the strain. Net sales slipped by 21.4 per cent to Rs 698 crore as price cuts undertaken in latter part of 2011 lowered average realisations.
MOIL's operating margins, which have traditionally hovered between 60 and 70 per cent since FY08, fell to 50 per cent during the nine month period. The 47 per cent higher other income of Rs 140 crore earned on its cash holdings during the period did stem the drop in net profits, which slipped by 31 per cent to Rs 311 crore. The resultant dip in investor sentiment caused the stock price to dip.
TURNAROUND POSSIBLE
MOIL needs better volumes and realisations to turn things around. The latter may be on the way. The Indonesian government slapped a 20 per cent levy on exports of manganese ore starting this month. Indonesia is a major exporter of manganese and the levy could make things tough for high-cost capacity in the country.
BHP Billitonhiked rates on manganese shipments from Australia. These early signs bode well for MOIL, which will benefit from increase in global rates. A weaker rupee also makes imports of manganese more expensive, this again works in MOIL's favour.
In the long run, freight costs incurred by inland ferro-alloy companies to import manganese could also provide an edge to MOIL. The company banks on the fact that new manganese mine additions are expensive.
The company's cost of production ranks among the lowest in the industry. This bestows it with high margins and staying power.
MOIL's production cost has been rising over the last five years on account of increased wage bills and spending more to increase mine output. But the company expects increased output in the coming years to more than compensate for higher costs.
OUTPUT BOOST NEEDED
MOIL currently produces around one million tonnes of manganese products. Volumes have remained stagnant over the last few years. Higher volumes, an essential imperative, may materialise over the next three-four years.
The necessary regulatory approvals to increase output are in place.
India's current steel production capacity is around 75 million tonnes per annum. . The country's target of achieving steel production of 100 million tonnes per annum by 2012 could take a year or two more. As steel production improves, MOIL has incentive to produce more manganese.
The company aims to double its mine output by 2016 to over two million tonnes . Risks facing the company include competition from domestic producers. . Additionally, imports will remain a threat. Further delays in domestic steel capacity additions will also hurt the company.
05 April 2012
MOIL : Target 350*** * ::Anand Rathi
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MOIL CMP
254
Target 350***
*
*Company Description*
* *
Manganese Ore (India) is into the exploration, development, production and
sale of manganese ore in India, operating 10 mines, six in Nagpur and
Bhandara districts (Maharashtra) and four in Balaghat district (Madhya
Pradesh). It markets various grades of manganese ores, electrolytic
manganese dioxide and ferro manganese. It sells manganese dioxide for the
dry-battery industry, as well as manganese oxide as a micro-nutrient for
cattle feed and fertilizers. It also operates a wind energy farm with an
installed capacity of 4.8 MW at Nagda Hills; and a 15.2-MW wind farm at
Ratedi Hills in Dewas district (Madhya Pradesh). Formerly known as
Manganese Ore (India), the name was changed to MOIL Ltd. in August 2010. It
was founded in 1896 and is based in Nagpur, India.****
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MOIL CMP
254
Target 350***
*
*Company Description*
* *
Manganese Ore (India) is into the exploration, development, production and
sale of manganese ore in India, operating 10 mines, six in Nagpur and
Bhandara districts (Maharashtra) and four in Balaghat district (Madhya
Pradesh). It markets various grades of manganese ores, electrolytic
manganese dioxide and ferro manganese. It sells manganese dioxide for the
dry-battery industry, as well as manganese oxide as a micro-nutrient for
cattle feed and fertilizers. It also operates a wind energy farm with an
installed capacity of 4.8 MW at Nagda Hills; and a 15.2-MW wind farm at
Ratedi Hills in Dewas district (Madhya Pradesh). Formerly known as
Manganese Ore (India), the name was changed to MOIL Ltd. in August 2010. It
was founded in 1896 and is based in Nagpur, India.****
11 March 2012
Technical: United Spirits, SB & T International, Dish TV, Agro Tech Foods, Pratibha Industries, MOIL, Tecpro, ::Business Line
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Please explain the short- and medium-term trend of United Spirits and SB & T International.
Thariath Kurian
United Spirits (Rs 530.7): United Spirits moved close to the long-term trough at Rs 425 formed in January 2009 and the stock continues to hover above this level. This level can act as a stop-loss for both short- as well as medium-term investors. If this level is breached, the supports at Rs 362 and then Rs 288 will come into play.
Short-term targets for the stock are Rs 750 and Rs 925. The zone between Rs 900 and Rs 950 is also a key medium-term resistance. Inability to move above this zone will mean that the stock will vacillate between Rs 500 and Rs 950 over the upcoming months.
Medium-term view will turn positive only on a strong close above Rs 950. Subsequent targets for the stock are Rs 1,068 and Rs 1,215.
08 February 2012
MOIL Target Price (INR) 249 Downgrade to Reduce due to recent out performance:: Avendus
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MOIL’s operational performance in the Dec11 quarter was lower than
estimates due to 7.3% decline in realizations and increase in other
expenditure. Other expenditure increased by 45.9% q‐o‐q to
INR481.9mn. Net profit increased by 0.5% q‐o‐q to INR1bn (against our
estimates of INR1.3bn). We lower our net profit forecast for FY12‐FY14
by up to 22.3% as we cut our realization estimates by 12.5% and raise
other expenditure by up to 10.0%. We lower our target to INR249,
after a rollover to Dec12 and downgrade rating on the stock to Reduce
due to 25.5% increase in stock price since Dec11.
Net sales declined by 3.5% q‐o‐q to INR2.4bn due to lower realizations
Net sales declined by 3.5% q‐o‐q to INR2.4bn (against our estimate of
INR2.7bn) due to 2.3% decline in manganese ore sales and 7.3% decline in sales
of electro manganese oxide. The decline in sales of manganese ore is due to
7.3% decline in realizations due to sales of low grade manganese ore and fines.
Sales volume increased by 5.4% q‐o‐q to 285,500 tonnes. Downward revision of
prices starting Jan12 for various grades of manganese ore has led us to lower
our realization estimate for FY12f‐FY14f by up to 12.5%. Our revenue estimates
for FY12f – FY13f are lowered by up to 13.2%.
EBITDA declined by 1.5% q‐o‐q to INR1.1bn
EBITDA declined by 1.5% q‐o‐q to INR1.1bn due to higher other expenditure.
Other expenditure increased 45.9% q‐o‐q to INR482mn. Royalty and cess
payment declined by 2.3% q‐o‐q with lower revenues. Staff cost declined by
7.4% q‐o‐q to INR567.2mn. We raise our estimates for other expenditure for
FY12f – FY14f by up to 10% to account for the increase in cost during 3QFY12.
This along with the decline in revenue estimates has led us to cut our FY12f –
FY14f EBITDA by up to 31.6%.
Net profit up 0.5% q‐o‐q due to higher other income
Net profit increased 0.5% q‐o‐q to INR1bn (against our estimate of INR1.3bn)
due to higher other income. Other income increased 5.3% q‐o‐q to INR498mn
due to increase in cash and cash equivalents and higher yield on investments.
Depreciation provisioning increased q‐o‐q by 1.3% to INR72.8mn. Tax/PBT of
33.2% was in line with estimates. We estimate cash and cash equivalents of
INR128/share as on Mar12.
Cut net profit forecast by up to 22.3%; Downgrade to Reduce
We cut our net profit forecast for FY12‐FY14 by up to 22.3% as we lower our
realization estimates by 12.5% to account for the downward revision in prices
with effect from Jan12 and raise other expenditure by up to 10.0%. We lower
our target price to INR249, after a rollover to Dec12, as we discount the
historical average (Dec10 – Feb12) EV/EBITDA and P/E by 30% to reflect the
commodity cycle of the manganese ore business. The 25.5% increase in stock
price since beginning Dec11 has led us to downgrade our rating on the stock to
Reduce. Risk factors include an increase in international manganese ore prices
and higher than estimated volumes.
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MOIL’s operational performance in the Dec11 quarter was lower than
estimates due to 7.3% decline in realizations and increase in other
expenditure. Other expenditure increased by 45.9% q‐o‐q to
INR481.9mn. Net profit increased by 0.5% q‐o‐q to INR1bn (against our
estimates of INR1.3bn). We lower our net profit forecast for FY12‐FY14
by up to 22.3% as we cut our realization estimates by 12.5% and raise
other expenditure by up to 10.0%. We lower our target to INR249,
after a rollover to Dec12 and downgrade rating on the stock to Reduce
due to 25.5% increase in stock price since Dec11.
Net sales declined by 3.5% q‐o‐q to INR2.4bn due to lower realizations
Net sales declined by 3.5% q‐o‐q to INR2.4bn (against our estimate of
INR2.7bn) due to 2.3% decline in manganese ore sales and 7.3% decline in sales
of electro manganese oxide. The decline in sales of manganese ore is due to
7.3% decline in realizations due to sales of low grade manganese ore and fines.
Sales volume increased by 5.4% q‐o‐q to 285,500 tonnes. Downward revision of
prices starting Jan12 for various grades of manganese ore has led us to lower
our realization estimate for FY12f‐FY14f by up to 12.5%. Our revenue estimates
for FY12f – FY13f are lowered by up to 13.2%.
EBITDA declined by 1.5% q‐o‐q to INR1.1bn
EBITDA declined by 1.5% q‐o‐q to INR1.1bn due to higher other expenditure.
Other expenditure increased 45.9% q‐o‐q to INR482mn. Royalty and cess
payment declined by 2.3% q‐o‐q with lower revenues. Staff cost declined by
7.4% q‐o‐q to INR567.2mn. We raise our estimates for other expenditure for
FY12f – FY14f by up to 10% to account for the increase in cost during 3QFY12.
This along with the decline in revenue estimates has led us to cut our FY12f –
FY14f EBITDA by up to 31.6%.
Net profit up 0.5% q‐o‐q due to higher other income
Net profit increased 0.5% q‐o‐q to INR1bn (against our estimate of INR1.3bn)
due to higher other income. Other income increased 5.3% q‐o‐q to INR498mn
due to increase in cash and cash equivalents and higher yield on investments.
Depreciation provisioning increased q‐o‐q by 1.3% to INR72.8mn. Tax/PBT of
33.2% was in line with estimates. We estimate cash and cash equivalents of
INR128/share as on Mar12.
Cut net profit forecast by up to 22.3%; Downgrade to Reduce
We cut our net profit forecast for FY12‐FY14 by up to 22.3% as we lower our
realization estimates by 12.5% to account for the downward revision in prices
with effect from Jan12 and raise other expenditure by up to 10.0%. We lower
our target price to INR249, after a rollover to Dec12, as we discount the
historical average (Dec10 – Feb12) EV/EBITDA and P/E by 30% to reflect the
commodity cycle of the manganese ore business. The 25.5% increase in stock
price since beginning Dec11 has led us to downgrade our rating on the stock to
Reduce. Risk factors include an increase in international manganese ore prices
and higher than estimated volumes.
18 December 2011
52-WEEK FLOP: MOIL ::Business Line
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Shares of manganese producer MOIL have shed 52 per cent over the last one year as a sharp drop in manganese prices dented realisations and profits. The first half of FY-12 saw net sales dip by 28 per cent as manganese prices fell 25-40 per cent over the past year.
Rising employee costs compounded troubles with net profits taking a hit of 36 per cent. Operating margins, as a result, contracted sharply to 51 per cent in the first half of the current fiscal from the 70 per cent in the year-ago period.
Manganese prices have come under immense pressure due to aggressive capacity additions in geographies such as South Africa and Australia. The supply glut, as well as an expected addition of more mines in Africa over the next two years, kept prices on a tight leash. Prices have also remained in check due to the reportedly high levels of inventory in Chinese ports. India has also seen private miners add significant capacity, piling up the pressure on MOIL.
However, working in favour of low-cost producers such as MOIL, is the fact that prices are fast approaching levels at which several high-cost producers in Africa could slip into losses. This may spark off a shutdown in higher cost mines and thus provide support to manganese realisations.
16 October 2011
Chart Focus: MOIL — Buy:: Business Line
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India's largest manganese producer, MOIL, has witnessed a 30 per cent correction in its stock price in the last three months following a sharp correction in manganese ore prices and weak global growth outlook. This provides investors the opportunity to accumulate the stock at attractive valuations.
A growing domestic market for steel, industry-topping profit margins, zero debt and high cash reserves make MOIL a very good defensive bet. The stock trades at 8.2 times trailing twelve month earnings which is at a discount to fellow public sector miners such as NMDC. On an EV/EBIDTA basis, the company trades at 3.5 times, which is at discount to global mining peers.
RECENT TROUBLES
MOIL has had to cut manganese prices by as much as 40 per cent as global prices tumbled on fears of excess supply. This took its toll on the company's June quarter results. Both net sales and profits fell by 40 per cent to Rs 210 crore and Rs 109 crore, respectively.
However, demand for manganese has remained fairly stable with global steel production, one of the largest manganese consumers, rising by 8.3 per cent over the first eight months of 2011.
Manganese prices are now approaching levels at which several global producers, especially in South Africa and Indonesia, could find it unprofitable to continue production. Any further slide in manganese prices could trigger high-cost miners to shut shop, providing a floor to prices.
In this context, MOIL's operating profit margins of 61 per cent from mining operations during the first quarter of FY12 (67 per cent during FY11) provide the company with the staying power to tide over volatile manganese prices.
The company is a zero-debt entity and has accumulated Rs 2,000 crore in cash (48 per cent of market cap). This cash will comfortably fund the company's plan to spend around Rs 120 crore to expand output from two mines by the end of this fiscal.
The targeted off-take of 1.2 million tonnes in FY12 should result in volume growth of around 15 per cent which could help offset the decline in realisations to some extent. Around 60 per cent of the company's output is of high-grade ferro-manganese whose realisations hold up better than lower grades.
Though imports do meet a third of domestic manganese demand, the consumers are mostly in the hinterland and they incur significant freight costs.
Indian steel production is poised to jump by around 40 per cent over the next four years, and manganese demand is expected to keep pace. MOIL's expansion plans include increasing output from its mines to 1.5 million from the current 1.1 million over the next four years. Also in the offing are two ferro-alloy plants to be built in collaboration with SAIL and RINL.
The company currently pays out 4.2 per cent of its net sales (excluding other income) to the Government as royalties. The recently approved new Mining Bill will double this payout. However, the company's margins provide it with the cushion to absorb this blow.
17 September 2011
Buy MOIL-Reading the leaves: Mn ore price recovery? ::JPMorgan
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MOIL Ltd Overweight
MOIL.BO, MOIL IN
Reading the leaves: Mn ore price recovery?
Investor concerns about MOIL given the steep price correction in global
manganese ore (down 60% from Aug-10 peak) and threat from cheaper
imports has led to the decline in share price. Weak domestic steel demand
(4.5%/7% in FY12E/FY13E, in our view) could keep volumes muted in the
near term. We are cutting our EPS by 30%/27% in FY12E/13E as we assume
a 22% lower realizations y/y in FY12E (vs. -10% previously) given a slower
than expected improvement in Mn ore market and possible pricing recovery
likely in 2012 (flat prices in 3QFY12E and modest improvement in
4QFY12E).
Waiting for Mn ore price recovery: Global miners have kept Mn ore
prices unchanged over the last 4-5 months stabilizing at $5.4/dmtu.
Inventories at Chinese ports have steadily declined from the peak of 4MT in
May to ~3.5MT as inquiries have increased recently. Chinese domestic
ferro-alloy market has shown an upward trend with prices of FeMn up
~10% since July. However, lower production due to power restriction in
Southern China has led to lower import offers in this sub region. On supply
side, the current price levels have reduced production from higher cost
mines (smaller Australian and South African mines have avg cash cost of
$5-5.5/dmtu).
Volume- Late steel cycle play: Sales volume in 1QFY12 was impacted by
price differential between domestic and imported ore. In our view, the weak
end market demand could keep volumes muted in the near-term despite
prices at par with imported Mn ore. We expect steel demand growth to
remain anemic (YTD +1.3% y/y) and given the exiting inventory, expect flat
volumes y/y in FY12E (1HFY12 volumes likely -10%y/y).
Mn ore price recovery - A key catalyst: The stock has declined ~20%
since mid-Jul and at 3.7x FY13E EV/EBITDA, we believe MOIL remains
attractive given its low cost of production and a robust balance sheet (FY11
net cash ~40% of Mcap). We see upside in MOIL from two key catalysts: a)
signs of Mn ore price increase (1% change in Mn ore realization impacts
EBITDA by 1.4%) and b) improvement steel demand and therefore, MOIL’s
offtakes. Key risks are slow recovery in Chinese demand and delay in
improvement of Mn ore prices; and lower volume trend in a weak domestic
steel environment.
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MOIL Ltd Overweight
MOIL.BO, MOIL IN
Reading the leaves: Mn ore price recovery?
Investor concerns about MOIL given the steep price correction in global
manganese ore (down 60% from Aug-10 peak) and threat from cheaper
imports has led to the decline in share price. Weak domestic steel demand
(4.5%/7% in FY12E/FY13E, in our view) could keep volumes muted in the
near term. We are cutting our EPS by 30%/27% in FY12E/13E as we assume
a 22% lower realizations y/y in FY12E (vs. -10% previously) given a slower
than expected improvement in Mn ore market and possible pricing recovery
likely in 2012 (flat prices in 3QFY12E and modest improvement in
4QFY12E).
Waiting for Mn ore price recovery: Global miners have kept Mn ore
prices unchanged over the last 4-5 months stabilizing at $5.4/dmtu.
Inventories at Chinese ports have steadily declined from the peak of 4MT in
May to ~3.5MT as inquiries have increased recently. Chinese domestic
ferro-alloy market has shown an upward trend with prices of FeMn up
~10% since July. However, lower production due to power restriction in
Southern China has led to lower import offers in this sub region. On supply
side, the current price levels have reduced production from higher cost
mines (smaller Australian and South African mines have avg cash cost of
$5-5.5/dmtu).
Volume- Late steel cycle play: Sales volume in 1QFY12 was impacted by
price differential between domestic and imported ore. In our view, the weak
end market demand could keep volumes muted in the near-term despite
prices at par with imported Mn ore. We expect steel demand growth to
remain anemic (YTD +1.3% y/y) and given the exiting inventory, expect flat
volumes y/y in FY12E (1HFY12 volumes likely -10%y/y).
Mn ore price recovery - A key catalyst: The stock has declined ~20%
since mid-Jul and at 3.7x FY13E EV/EBITDA, we believe MOIL remains
attractive given its low cost of production and a robust balance sheet (FY11
net cash ~40% of Mcap). We see upside in MOIL from two key catalysts: a)
signs of Mn ore price increase (1% change in Mn ore realization impacts
EBITDA by 1.4%) and b) improvement steel demand and therefore, MOIL’s
offtakes. Key risks are slow recovery in Chinese demand and delay in
improvement of Mn ore prices; and lower volume trend in a weak domestic
steel environment.
11 August 2011
MOIL -- Lower than expected volumes hurt 1QFY12 earnings ::JPMorgan,
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MOIL Ltd Overweight
MOIL.BO, MOIL IN
Lower than expected volumes hurt 1QFY12 earnings
Weak volume trends clouds the quarter: MOIL reported 1QFY12
EBITDA of Rs1.3bn (-21% q/q) and PAT of Rs1.1bn (-18% q/q), below
JPMe at Rs1.4bn and 1.2bn respectively. While the weak pricing trend
was expected (Mn ore ASP declined ~10%) post the two price cuts in
1Q (in Apr-11 and then again in mid-May-11), lower offtakes by the
customers hurt volumes in the quarter. Mn ore sales volume during the
quarter were at ~220kt (-15% q/q; -19% y/y) vs. JPMe at 245kt. While
the company had highlighted weak volume trends in the 4QFY11
conference call (driven by lower priced imports in the first half of the
quarter, leading to the price cut in May), the delivery of lower priced
import orders placed in 4QFY11 and tepid demand trends among ferroalloy
and steel mills may have impacted offtakes during the quarter.
Subdued volume trend to continue into 2QFY12: While management
has indicated to soft trends continuing into the current quarter, we do not
expect any large recovery in volumes in the 2QFY12 given continued
weakness in the end demand for steel. The management does not expect
any impact on its volumes from the recent disruption in steel production
due to the ban on iron ore mining in Bellary among its large customers.
MOIL has targeted production of 1.2MT in FY12E and had inventory of
over 100kt at the end of FY11.
Price decline offset by better mix: Despite the sharp price cut in the
1QFY12 (blended price for ferro-grade Mn ore available with MOIL was
cut by 12% in the beginning of the quarter and by another 18% on 23-
May-11), realization in the quarter declined ~10% q/q. We believe that
improving product mix shift towards higher priced ore grades helped
partially offset the sharp base price decline. The blended prices for
2QFY12 were lowered by ~5% as mix shift continues to offset base price
cuts. As per the data on available quantity published with the 2QFY12
pricing, proportion of higher priced ferro-grade ore (price Rs7,000-
12,000) increased from 28% in 3QFY11 to 42%. Lower-margin fines
(prices Rs2,200-3,800) saw share decline to 14% for 2QFY12 from
around 43% in 3QFY11. As per news reports (steelguru), global Mn
ore prices have been stable over the last few months (Aug was the
fourth consecutive month of flat prices after a very weak 1HCY11),
which points to Mn ore prices bottoming out at current levels.
Domestic prices currently at par with the import prices for Mn ore.
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MOIL Ltd Overweight
MOIL.BO, MOIL IN
Lower than expected volumes hurt 1QFY12 earnings
Weak volume trends clouds the quarter: MOIL reported 1QFY12
EBITDA of Rs1.3bn (-21% q/q) and PAT of Rs1.1bn (-18% q/q), below
JPMe at Rs1.4bn and 1.2bn respectively. While the weak pricing trend
was expected (Mn ore ASP declined ~10%) post the two price cuts in
1Q (in Apr-11 and then again in mid-May-11), lower offtakes by the
customers hurt volumes in the quarter. Mn ore sales volume during the
quarter were at ~220kt (-15% q/q; -19% y/y) vs. JPMe at 245kt. While
the company had highlighted weak volume trends in the 4QFY11
conference call (driven by lower priced imports in the first half of the
quarter, leading to the price cut in May), the delivery of lower priced
import orders placed in 4QFY11 and tepid demand trends among ferroalloy
and steel mills may have impacted offtakes during the quarter.
Subdued volume trend to continue into 2QFY12: While management
has indicated to soft trends continuing into the current quarter, we do not
expect any large recovery in volumes in the 2QFY12 given continued
weakness in the end demand for steel. The management does not expect
any impact on its volumes from the recent disruption in steel production
due to the ban on iron ore mining in Bellary among its large customers.
MOIL has targeted production of 1.2MT in FY12E and had inventory of
over 100kt at the end of FY11.
Price decline offset by better mix: Despite the sharp price cut in the
1QFY12 (blended price for ferro-grade Mn ore available with MOIL was
cut by 12% in the beginning of the quarter and by another 18% on 23-
May-11), realization in the quarter declined ~10% q/q. We believe that
improving product mix shift towards higher priced ore grades helped
partially offset the sharp base price decline. The blended prices for
2QFY12 were lowered by ~5% as mix shift continues to offset base price
cuts. As per the data on available quantity published with the 2QFY12
pricing, proportion of higher priced ferro-grade ore (price Rs7,000-
12,000) increased from 28% in 3QFY11 to 42%. Lower-margin fines
(prices Rs2,200-3,800) saw share decline to 14% for 2QFY12 from
around 43% in 3QFY11. As per news reports (steelguru), global Mn
ore prices have been stable over the last few months (Aug was the
fourth consecutive month of flat prices after a very weak 1HCY11),
which points to Mn ore prices bottoming out at current levels.
Domestic prices currently at par with the import prices for Mn ore.
03 August 2011
MOIL - Pricing pressure to keep performance muted - Visit Note - SPA Sec
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MOIL is a dominant and purely a manganese player in India. Over the past couple of quarters, realizations have come down by 35%. The company is looking to overcome the tide by improving production and targeting a volume growth of 30% in the current fiscal. We met the management of the company and following are the key takeaways.
Realizations continue to be under pressure
In 2010, global steel production increased by 16.7% however during the same period manganese production grew at a faster rate of 33.3% leading to a surplus situation in the international markets. International manganese prices have corrected by 37.4%, to USD 5.4/dmtu. As a result, average NSR/t for MOIL has come down from INR 9,376 in 4QFY11 to INR ~7,600 in 1QFY12, down by 35% YoY.
Pushing volumes to make up for low realizations
In order to make up for lower NSRs, MOIL is aiming to increase its turnover by 30% in FY12 to 1,300,000t by increasing production from existing mines to 1,150,000t and liquidating 180,000t of inventory (as of FY11 end). The management is aiming to achieve this growth through import substitutes.
Margins sensitive to NSRs
MOIL is one of the lowest cost producers of manganese producers in the world with an average cost/t of INR 2,800. Employee costs account for 45-50% of the total costs with next wage revision due in 2017. Employee costs and other direct expenses are expected to remain stable over the coming years, making the operating margins a direct function of realizations. With the international prices under pressure we expect EBITDA margins to remain in the range of 60.0% vis-Ã -vis 67.3% in FY11.
Expansion plans
The capex to enhance the production in the Gumgaon and Balaghat mine is expected to be completed by October and December 2011 respectively. This is will increase the ROM production from 60,000tpa to 100,000tpa.
Maharashtra government has reserved 814.7ha of land for MOIL and the company has applied for a prospecting license for the same. Post the acquisition of PL, the production is expected to commence in 2013.
Updates on the joint venture plans
MOIL has entered into joint ventures (50:50) with SAIL and RINL to integrate forward and setup ferro manganese and silico manganese plants. In these projects, the JV parties will setup ferro manganese plants of 51,000tpa and silico manganese plants of 112,500tpa at a total outlay of INR 5,981.9mn. These projects are expected to come on stream by 2HFY13.
Mining Bill – further clarity needed
As per the draft MMDR bill passed by the GoM, non-coal producers need to share 100% of the royalty with the people affected at the project site. MOIL currently pays 4.2% of royalty which will be increased to 8.4% if the MMDR Bill is passed and becomes an act. However, the management awaits further clarity on various issues mentioned in the bill.
05 July 2011
JPMorgan:: MOIL 2QFY12 Mn ore price cut by 6%; 1QFY12 demand remains weak
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MOIL Ltd
Overweight
MOIL.BO, MOIL IN
2QFY12 Mn ore price cut by 6%; 1QFY12 demand remains weak
MOIL cut 2QFY12 Mn ore prices by ~6% q/q: As per the pricing
data announced for 2QFY12 by the company, blended prices for Mn ore
have been cut by ~6% from the lowered prices of late-May (and ~10%
from the prices announced in the beginning of 1QFY12). Prices for
ferro-grade Mn ore (higher grade) were cut by ~10%, while the price for
silico manganese grade was cut by 5-8% from the revised May-11
levels. MOIL had sharply cut prices in 1QFY12 given the increasing
pressure from declining Mn ore prices in the global market and the large
inventory at Chinese port (nearly 4MT). During 1QFY12, the blended
price for ferro-grade Mn ore available with MOIL was cut by 12% in the
beginning of the quarter and by another 18% on 23-May-11. As per news
reports (MetalFirst), the Chinese Mn ore and alloy market became active
in June after a weak trend in Apr-May, however, high port inventory is
likely to keep Mn ore prices under pressure.
Availability of higher grade Mn ore improves again in 2QFY12: As
highlighted previously, the product mix that adversely impacted MOIL’s
relaizations in 2HFY11 has improved further. As per the data on
available quantity published with the pricing, proportion of higher priced
ferro-grade ore (price Rs7,000-12,000) increased from 28% in 3QFY11
to 42% in the data published for 2QFY12. Lower-margin fines (prices
Rs2,200-3,800) saw share decline to 14% for 2QFY12 from around 43%
in 3QFY11. This should help offset the sharp decline in base prices
during the quarter, therfore, leadinb to blended prices remaining nearly
flat (even after the sharp price decline at the start of 1QFY11) and
revised downwards by only 5% in late-May.
Available quantity increased sharply: As per the data released, the
total quantity available increased from 124kt as of 23-May-11 to 335kt in
the beginning of July-11. While part of the increase in quantity available
is seasonal (given monsoon impacts mining activities), in our view, weak
steel industry trends in 1QFY12 could have led to higher inventory
levels.
1QFY12E earnings preview: Lower prices and weak volume trends:
We expect the MOIL to report a soft 1Q given the price cut implemented
over the last few months and also tepid demand trends. We estimate
average relaizations to decline ~7% q/q and volumes to decline ~6% q/q
and ~10% y/y. In our view, volumes in the first half of the quarter were
likely impacted by the lower priced imports (given declining global
prices), which resulted in another price cut on 23-May. We expect
1QFY12 EBITDA at Rs1.4bn (-12% q/q and -44% y/y) and PAT of
Rs1.2bn (-33% y/y).
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MOIL Ltd
Overweight
MOIL.BO, MOIL IN
2QFY12 Mn ore price cut by 6%; 1QFY12 demand remains weak
MOIL cut 2QFY12 Mn ore prices by ~6% q/q: As per the pricing
data announced for 2QFY12 by the company, blended prices for Mn ore
have been cut by ~6% from the lowered prices of late-May (and ~10%
from the prices announced in the beginning of 1QFY12). Prices for
ferro-grade Mn ore (higher grade) were cut by ~10%, while the price for
silico manganese grade was cut by 5-8% from the revised May-11
levels. MOIL had sharply cut prices in 1QFY12 given the increasing
pressure from declining Mn ore prices in the global market and the large
inventory at Chinese port (nearly 4MT). During 1QFY12, the blended
price for ferro-grade Mn ore available with MOIL was cut by 12% in the
beginning of the quarter and by another 18% on 23-May-11. As per news
reports (MetalFirst), the Chinese Mn ore and alloy market became active
in June after a weak trend in Apr-May, however, high port inventory is
likely to keep Mn ore prices under pressure.
Availability of higher grade Mn ore improves again in 2QFY12: As
highlighted previously, the product mix that adversely impacted MOIL’s
relaizations in 2HFY11 has improved further. As per the data on
available quantity published with the pricing, proportion of higher priced
ferro-grade ore (price Rs7,000-12,000) increased from 28% in 3QFY11
to 42% in the data published for 2QFY12. Lower-margin fines (prices
Rs2,200-3,800) saw share decline to 14% for 2QFY12 from around 43%
in 3QFY11. This should help offset the sharp decline in base prices
during the quarter, therfore, leadinb to blended prices remaining nearly
flat (even after the sharp price decline at the start of 1QFY11) and
revised downwards by only 5% in late-May.
Available quantity increased sharply: As per the data released, the
total quantity available increased from 124kt as of 23-May-11 to 335kt in
the beginning of July-11. While part of the increase in quantity available
is seasonal (given monsoon impacts mining activities), in our view, weak
steel industry trends in 1QFY12 could have led to higher inventory
levels.
1QFY12E earnings preview: Lower prices and weak volume trends:
We expect the MOIL to report a soft 1Q given the price cut implemented
over the last few months and also tepid demand trends. We estimate
average relaizations to decline ~7% q/q and volumes to decline ~6% q/q
and ~10% y/y. In our view, volumes in the first half of the quarter were
likely impacted by the lower priced imports (given declining global
prices), which resulted in another price cut on 23-May. We expect
1QFY12 EBITDA at Rs1.4bn (-12% q/q and -44% y/y) and PAT of
Rs1.2bn (-33% y/y).
09 April 2011
MOIL :: Mn ore price recovery - A near term catalyst :Target: Rs490:JP Morgan
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MOIL Ltd
Overweight
MOIL.BO, MOIL IN
Mn ore price recovery - A near term catalyst
• Mn ore price recovery to be a near term catalyst: MOIL’s stock has
corrected 11% YTD on concerns of weak global Mn ore pricing trends. Mn ore
is a key driver for MOIL’s earnings contributing 94% of its EBITDA. With
much of the volume growth from MOIL’s capex programs likely to be back-end
weighted (we expect 5% in FY12-13E), Mn ore pricing trends remain
instrumental to earnings growth. We estimate a 1% change in Mn ore prices,
impacts MOIL’s FY12-13E EBITDA by 1.4%, which makes a key catalyst for
the stock’s performance.
India Equity Research Reports, IPO and Stock News
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MOIL Ltd
Overweight
MOIL.BO, MOIL IN
Mn ore price recovery - A near term catalyst
• Mn ore price recovery to be a near term catalyst: MOIL’s stock has
corrected 11% YTD on concerns of weak global Mn ore pricing trends. Mn ore
is a key driver for MOIL’s earnings contributing 94% of its EBITDA. With
much of the volume growth from MOIL’s capex programs likely to be back-end
weighted (we expect 5% in FY12-13E), Mn ore pricing trends remain
instrumental to earnings growth. We estimate a 1% change in Mn ore prices,
impacts MOIL’s FY12-13E EBITDA by 1.4%, which makes a key catalyst for
the stock’s performance.
13 February 2011
JP Morgan: Buy MOIL -Steely driver; target Rs490
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MOIL Ltd
Initiation ;Overweight ;MOIL.BO, MOIL IN
Steely driver
• Low cost + large reserves = continued strong margins: initiate with
OW, Mar-12 PT of Rs490 based on 6x FY12E EV/EBITDA. MOIL is
among the few pure play Mn ore producers globally with a large high-grade
reserve base of 22MT (16% of India’s reserves) and average mine life of
~20years. Its cost of production of $65/MT in FY10 was at the lower end of
the global cost curve and should remain stable as MOIL is shielded from
increases in transport costs and royalties/duties as these are borne by the
end-customers. Despite the current subdued pricing environment (MOIL cut
prices by ~10% during 3Q and 4QFY11), we expect stable costs to help the
company maintain EBITDA margins above historical levels (65+%).
• Chinese steel demand is a key driver of prices: MOIL produces purely
for the Indian domestic market, but Chinese demand for Mn ore is a key
driver of Indian Mn prices. While China is the largest producer of Mn ore, it
is mostly low-grade and therefore China remains a net importer of the
commodity. Prices for Mn ore, a key driver of MOIL’s profitability, have
seen a step change over the last few years, driven by the spike in Chinese
steel production. J.P. Morgan’s China steel analyst expects China steel
production to grow at ~5% over FY12-13E versus the 1% y/y growth in
2H10. We believe that Mn ore prices have stabilized and expect an ASP for
MOIL of between Rs10-11K/MT over the medium term.
• High cash levels and strong FCF: MOIL has a strong balance sheet with
no debt (Dec-10 net cash stands at Rs18bn) and generates robust cash flow.
This should support the company’s capex plan of Rs7.7bn over the next 3-4
years to increase production to at least 1.5MT by FY15. MOIL is also
augmenting its ferro-alloy capacity by investing Rs1.5bn in its JVs. We
expect FCF generation to remain strong at $130-140MM per year over
FY11-13E.
• Valuations, price target, key risks: Our target EV/EBITDA multiple
represents a 20% premium to current global mining peer valuations (those
with Mn ore exposure), a target supported in our view by its low cost of
production, robust balance sheet and domestic market focus. Key risks to our
rating are slowdown in China steel demand and subsequent impact on Mn
ore prices and potential changes in the mining law in India.
Investment summary
MOIL is not only the largest producer of Mn ore in the country (5th largest globally)
accounting for 50% of total production volume, it is also among the lowest cost
producers of Mn ore in the world according to the company ($65/MT in FY10).
MOIL has reserves of 22MT (accounting for 16% of India's manganese reserves)
with the average mine life of reserves at ~20 years (based on current production).
The company plans to augments its reserves base by ~3-4MT in FY12E. The
reserves of the company have an average Mn grade of 37% with some mines having
Mn content of ~40-42%.
Mn ore prices are also dependent on demand from ferro-alloy and therefore, steel
production. Similar to other bulk commodities, Chinese demand is critical for
Mn ore prices as the country is a producer of low-grade ore and remains short
on Mn ore. As per our China steel analyst, Chinese steel production growth is
expected to slow to ~5% over 2011-2012 (vs. 10.6% in 2010) leading to continued
demand for imported Mn ore. The muted steel production in China in 2H10 (1% y/y
growth) led to global Mn ore prices correcting by 19% over the last 2 quarters
(MOIL cut prices by ~10% in 3Q and 4Q). However, the Mn ore prices have
stabilized since Nov-10 and we expect MOIL’s Mn ore realization to remain in the
current range of Rs10-11K/MT. We believe that the low cost of production for the
company will allow it to maintain EBITDA margin levels above 65+% even at the
current subdued Mn ore price levels.
Mn ore is a raw material in the production of ferro-alloys and therefore, steel
production. Hence, a key driver for Mn ore remains the expected growth in steel
production. MOIL’s business is focused only on the growing steel industry in India
with no exposure to the export markets, therefore, domestic steel production is a key
driver for the company’s business. The planned capacity addition by steel players
over the next 2-3 years will support demand for ferro-alloys and hence Mn ore in the
country. As per the Ministry of Steel, India should achieve a total installed capacity
of 121 million tonnes by FY12 (from ~73MT currently) and further to 200 million
tonnes by 2020. We expect steel production in India to remain strong over the next
few years driven by consumption growth of 8-9% over FY12-13.
A key risk for the stock is a sharp slowdown in Chinese steel production impacting
ferro-alloy and Mn ore prices, potential changes in the mining law in India and
limited levers of volume growth in a growing steel environment.
Investment Positives
Pure play producer with a strong resource base
MOIL has a strong manganese (Mn) ore resources base in India of 61.7MT (16% of
India’s total Mn ore resources) in the 10 mines under operation in the Central India
mineral belt (MP & Mah.). MOIL’s current reserves at 22MT account for nearly 16%
of India's Mn reserves and the company plans to augment its reserves base by ~3-
4MT in FY12E. Based on the current production rate, the average mine life of
MOIL’s reserves is ~20 years. The strong resource base makes the company the
largest and only pure play manganese ore producer in India accounting for
50% of the country’s production. The total leasehold area of the resources
allocated to the company is nearly 1,800 hectares, which in our view, provides
opportunity for reserve addition through exploration. Further, area of 814.7 hectare
has been reserved by the government for MOIL and the company has applied for
prospecting license for the same.
MOIL’s reserves, in our view, remain of high quality with ~55% of proved and
probable reserves with an average Mn content of 40% (remaining are mostly
medium-grade). The company’s Balaghat mine (resources of 9MT) has reserves with
an average grade of 40%, which we consider as high grade ore. The Dongri Buzurg
mine (resources of 3MT) also has an average grade of 42% Mn content. The other
mines with relatively good grade Mn reserves are the Kandri mine and the Ukwa
mine. These mines accounted for 64% of MOIL’s production in FY10.
Domestic steel production remains key to Mn ore demand
Demand and therefore price for manganese ore is directly dependent on the
production of steel (accounts for ~90% of Mn demand globally). Mn ore is used as
an input for the production of ferro alloys, which in turn are used for steel
production.
MOIL’s business is focused only on the growing steel industry in India with no
exposure to the export markets, therefore, domestic steel production is the key
driver for the company’s business. We remain bullish on the multi-year demand
scenario of steel consumption in the country with apparent consumption growth of
8+% over the next few years, which should result in continued strong ferro-alloy
demand and thus Mn ore demand. The strong growth in steel production will be
supported by the government spending on infrastructure, auto sector demand, and
increasing consumption of consumer durables. While Mn ore realizations are driven
mostly by Chinese steel demand, the volume growth for the company could be
impacted by any slowdown in steel demand in India. We would therefore keep a
close eye on the recent slowdown in on-ground demand for steel and sign of recovery
in the domestic market.
The planned capacity addition by steel players over the next 2-3 years will support
the demand for ferro alloys and hence Mn ore in India. As per the Ministry of Steel,
India will achieve a total installed capacity of 121 million tonne by FY12 (from
~73MT currently) and increase it further to 200 million tonne by 2020. The domestic
market focus of MOIL therefore positions it favorably for the strong consumption
trends in steel in India, in our view. Moreover, MOIL’s domestic sales are likely to
be more profitable as the customer pays for the royalty and the transportation cost to
the plant.
Mn ore price – another China story
Mn ore prices, which is the key driver for profitability for MOIL, has seen a step
increase over the last few years, driven by the sharp spike in Chinese steel
production. China’s domestic Mn ore production tends to be of lower grade, and thus
while China is a large producer of the intermediary (ferro-alloys), it remains a net
importer of manganese ore and also the largest consumer of the ore. Chinese steel
production is a key catalyst for ferro-alloy, and therefore for Mn ore prices. The
impact of Chinese demand is evident in the prices of Mn ore last year when prices
recovered during the 1H 2010 (up ~35% from Jan-Jul-10) with increasing steel
production from the country’s stimulus package. However, with the power restricting
impacting steel production in the 2H of the year, prices for Mn ore have declined
~19% since Aug-10. MOIL has cut quarterly contract prices in 3Q and 4QFY11 (by
~10% over the period) given the weakness in global Mn ore prices. Our Chinese steel
analyst expects China steel production to increase by ~5% over the next two years
after 1% growth in 2H 2010.
Low cost producer
MOIL is one of the lowest cost producers of manganese ore in the world, according
to the company, with an average cost of production of $65/MT in FY10. A key
reason for the lower cost is the statutory levies (royalty & cess) and transportation
costs (domestic sales are on "free on truck" or "free on rail" basis), which are borne
by the customers. The company’s mines are located in the Central region of the
country giving it a competitive advantage. The mine location gives MOIL a
marketing advantage with its accessibility to steel and ferro-alloy manufacturing
customers located in the nearby regions (Orissa, Chhattisgarh, Jharkand).
Employee cost remains a key cost component for the company accounting for ~50%
of the total cost of mining of Mn ore. MOIL has a current employee base of 6700
people and according to the company this is expected to decline modestly to ~6500
employees over the next few years as the company takes up mechanization of its
existing mines. The company revised its wages for all employees (except executive
employees) in Aug-09 effective for a period of ten years from Aug-07 (next wage
revision due in Aug-2017). However, the DA component of employee costs is
expected to increase given the higher inflation. We are estimating employee cost/MT
to increase ~5% over the next few years.
Focusing on value addition
MOIL has also diversified into the production of value added products such as ferromanganese and electrolytic manganese dioxide (processing capacity of 900kt). These
segments are still a small portion of the company’s sales mix (4.8% of sales and
3.3% of EBITDA in FY10). MOIL's has undertaken expansion of its ferromanganese capacity (by 55kt) and will also add silico-manganese capacity (add
112.5kt) through JVs with SAIL and RINL to utilize the low/medium grade ores
produced by the company. If the total capacity of the two JVs is operated at full
utilization, it would require 0.33MT of manganese ore (22% of the 1.5MT expanded
production capacity. The JV projects should help the company by providing linkage
to the trends in the ferro-alloy industry and also helps MOIL to maintain relationship
with its end customers (steel companies).
Further, MOIL also has two manganese ore beneficiation plant (total capacity of
900kt each) at Balaghat and Dongi-Buzurg mines. The beneficiation process helps
increase the Mn content in the ore finally sold to nearly 48-49.5%. The entire
production from these mines is handled through the plants.
Expansion project to drive back-end weighted volume
growth
MOIL has outlined mining projects (deepening of existing vertical shafts and sinking
of new shafts) to increase its production capacity. The company is also developing its
open cast mines (by gradual mechanization) by induction of Heavy Earth Moving
Machinery. The capex for the various mining projects is nearly Rs7.7bn, which
would increase production capacity to at least 1.5MT by 2015 (from 1.1MT
currently). However, in our view, most of the volume growth from the projects is
expected to be back-ended (mostly post-FY13). New mines on 814 hectare reserved
were allocated by the government to MOIL in the state in Maharashtra. Some of the
mines are adjacent to the existing MOIL mines and the company has applied for a
prospecting license for the area and management expects to get the PL in the next 6-
9 months. Exploration in this area would help increase the reserve base of the
company aiding long-term production growth.
MOIL has also initiated two key JV projects with SAIL and RINL to set-up silicomanganese plants (that would utilize the low/medium grade ores) given the gradual
shift to this alloy in the production of steel. The expected investment by MOIL in
these project is ~Rs1.5bn. Silico-manganese is used extensively in the production of
long steel products, demand for which is driven by construction spending.
Flush with cash to support capex
Similar to most of the PSU mining companies, MOIL has a strong balance sheet with
no debt (Dec-10 net cash currently stands at Rs18bn or 26% of current market cap)
and robust cash flow generating business. The various mining projects outlined by
the company would require a capital outlay of Rs7.7bn (and the Rs1.5bn investment
in the JV projects), with most of the capex for long gestation projects (ranging from
3-4years). The company’s historical dividend payout is close to 20% and has a
dividend yield of 1.4%. While the company is looking at acquisition of Mn ore mines
overseas and allocation of coal or Mn ore mines in India to use its large cash balance,
we believe these are unlikely in the near-term. We believe that the strong profitability
should help MOIL generate FCF of $130-140MM in FY11-13E.
Investment negatives and risks
Weakness in the value chain: Steel demand
As the steel industry remains the single largest consumer of Mn ore (through Mn
alloy products), Mn ore prices and production tracks the global steel production.
Demand for manganese ore (contributing 94% of MOIL’s FY10 revenue and
EBITDA) is dependent on steel production, consequently linking ore prices to the
state of the steel industry. Slowdown in steel production directly impacts the offtakes
and prices of manganese ore. As seen in the recent global slowdown, global steel
production declined 8% in 2009 leading to a 61% y/y decline in average manganese
ore prices. Chinese demand is critical for Mn ore prices and it remains short on Mn
ore. The country is a producer of Mn ore, mostly very low-grade ore, and the largest
consumer given its ferro-alloy production. Therefore, a key risk to the Mn ore prices
remains a sharp slowdown in Chinese steel production impacting ferro-alloy demand.
MOIL is a mining company with strong leverage to the underlying commodity
prices (Mn ore). For example, while Mn ore realizations increased by 103% in
FY08, EBITDA increased by 280% in the same time period.
Weak ferro-alloy prices could increase alloy imports
The ferro-alloys industry in India remains highly underutilized operating at
utilization levels of 53-60%. The current capacity of ferro-alloys in India is sufficient
to meet steel production of ~220million tones vs. the current annual production of
around 60-65million tones. Additionally any sharp slowdown globally in ferro alloy
prices, could result in increasing imports into the country, which could hurt the
demand for Mn ore and prices. MOIL is undertaking forward integration projects to
expand its manganese alloy capacity to utilize its lower low/medium grade ore.
While expansion in an already underutilized industry could be a headwind for the
company during weak global environment, we think the small contribution of the
segment to MOIL’s profitability (3% of FY10 EBITDA) will limit the earnings
impact.
Regulatory risks on profitability and expansion
While MOIL is shielded from hike in royalties, export tax and freight rate (as these
costs are borne by the customers in domestic sales), any potential changes in the
mining act could impact the company. The proposed draft of the MMDRA calls for
implementation of certain provisions (like profit sharing of 26% with the local
population, etc.) could adversely impact MOIL similar to other mining companies in
India. However, the definitions, details and implementation of the draft are still
unclear.
Any delays in receiving necessary regulatory approvals and clearances from the
government to add new mines and renewal of existing mine leases could delay the
expansion plans and restrict volume growth of the miner. MOIL’s manganese ore
production is dependent significantly on the production in the Balaghat (MP) and
Dongri Buzurg (Mah.) mines. These mines account for 58% of the company’s
reserves and contributed nearly 53% of its production in FY10.
Volume growth dependent on production capacity
MOIL’s expected production for FY11 at 1.15MT nearly caps out production growth
given its current production capacity of 1.1MT. While the company has increased
focus on developing its open cast mines along with increasing capacity in the
underground mines over the medium term, much of the additional capacity will come
post FY13. In the near-term, MOIL expects production to increase in the DongariBuzurg mines and Gumgaon mine (expected to start production from 4QFY12). Any
delay in these capex could lead to lackluster volume growth. We expect
FY11/FY12E production growth of 3.5% and 5% respectively.
Rising cost of production
MOIL has seen significant increases in its mining costs primarily due to the higher
employee costs post the wage revision implemented by the company in FY09.
Employee costs have also been impacted in the last few years due to the increased
competition for skilled labor. As seven of the 10 mines operated by MOIL are
underground mines (which already have higher cost of production vs. open-cast
mines), the costs of mining are also likely to rise as mineral deposits reach deeper
horizons. We expect Mn ore cost/MT to increase by 4% over FY12-13E.
Valuation and share price analysis
MOIL has a limited trading history given its Dec-10 listing. While there are no listed
pure-play manganese companies, we have included companies with significant
exposure to manganese in its peer group. These include OM Holdings, Eramet, Vale,
ENRC and BHP Billiton. Similar companies in India like Sandur Manganese and
Iron Ore, Tata Steel, etc, either have limited trading information or use the
manganese ore produced for internal consumption.
We also broaden the valuation horizon to include the domestic steel player and
mining companies. We include steel companies given the direct linkage of the steel
industry to underlying commodity (steel sector consumes over 90% of Mn ore
produced). While the steel demand and prices have a bearing on the Mn ore prices,
we also include mining companies in the peer group, given the strong margins and
cash flow profile.
We use earnings based metrics for valuation given the underlying commodity price
environment makes DCF metric volatile. We prefer EV/EBITDA over P/E as the
former takes into account the differing financial leverage profile among companies.
Our Mar-12 PT of Rs490 is based on 6x FY12E EV/EBITDA. The target multiple
is at a 20% premium to the global mining peers (with Mn ore exposure)
primarily due to the following reasons:
• Costs of production are at the lower end of the global Mn ore cost curve
(We estimate MOIL is among the lowest cost producers of Mn ore with
a Cost/MT of $65/MT)
• A robust balance sheet with no debt and 26% of its market cap in cash.
We expect MOIL to generate FCF of $130-140mn over FY11-13E
• Focus on the domestic steel market where steel consumption is expected
to grow at 8-9% over the next few years.
We believe that the valuation premium to global peers will hold going forward,
similar to domestic miners NALCO and Coal India, as a key driver impacting MOIL
and its peer group (Assore, OMH and Eramet) is the trend in global Mn ore prices.
NALCO trades at a premium of 40% compared to global peers, while COAL trades
at a premium of 34%. The low cost of production (bottom quartile), combined with
very strong balance sheets, in our view justify a premium for India’s state owned
miners.
We expect global Mn ore prices to improve from current levels as China steel
production increases by ~5% p.a. over the next few years (versus 1% growth in
2H2010), and we expect MOIL's realizations to increase 3-7% over FY12-13E.
Unlike its peers that have various mineral assets, Mn ore is the core operation for
MOIL (contributing 94% of MOIL’s EBITDA) and we believe that a better Mn ore
pricing environment will help the company maintain its profitability given its low
and stable cost structure. Key downside risks to our rating are a slowdown in
Chinese steel demand and subsequent impact on Mn ore prices, or potential changes
in the mining law in India.
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MOIL Ltd
Initiation ;Overweight ;MOIL.BO, MOIL IN
Steely driver
• Low cost + large reserves = continued strong margins: initiate with
OW, Mar-12 PT of Rs490 based on 6x FY12E EV/EBITDA. MOIL is
among the few pure play Mn ore producers globally with a large high-grade
reserve base of 22MT (16% of India’s reserves) and average mine life of
~20years. Its cost of production of $65/MT in FY10 was at the lower end of
the global cost curve and should remain stable as MOIL is shielded from
increases in transport costs and royalties/duties as these are borne by the
end-customers. Despite the current subdued pricing environment (MOIL cut
prices by ~10% during 3Q and 4QFY11), we expect stable costs to help the
company maintain EBITDA margins above historical levels (65+%).
• Chinese steel demand is a key driver of prices: MOIL produces purely
for the Indian domestic market, but Chinese demand for Mn ore is a key
driver of Indian Mn prices. While China is the largest producer of Mn ore, it
is mostly low-grade and therefore China remains a net importer of the
commodity. Prices for Mn ore, a key driver of MOIL’s profitability, have
seen a step change over the last few years, driven by the spike in Chinese
steel production. J.P. Morgan’s China steel analyst expects China steel
production to grow at ~5% over FY12-13E versus the 1% y/y growth in
2H10. We believe that Mn ore prices have stabilized and expect an ASP for
MOIL of between Rs10-11K/MT over the medium term.
• High cash levels and strong FCF: MOIL has a strong balance sheet with
no debt (Dec-10 net cash stands at Rs18bn) and generates robust cash flow.
This should support the company’s capex plan of Rs7.7bn over the next 3-4
years to increase production to at least 1.5MT by FY15. MOIL is also
augmenting its ferro-alloy capacity by investing Rs1.5bn in its JVs. We
expect FCF generation to remain strong at $130-140MM per year over
FY11-13E.
• Valuations, price target, key risks: Our target EV/EBITDA multiple
represents a 20% premium to current global mining peer valuations (those
with Mn ore exposure), a target supported in our view by its low cost of
production, robust balance sheet and domestic market focus. Key risks to our
rating are slowdown in China steel demand and subsequent impact on Mn
ore prices and potential changes in the mining law in India.
Investment summary
MOIL is not only the largest producer of Mn ore in the country (5th largest globally)
accounting for 50% of total production volume, it is also among the lowest cost
producers of Mn ore in the world according to the company ($65/MT in FY10).
MOIL has reserves of 22MT (accounting for 16% of India's manganese reserves)
with the average mine life of reserves at ~20 years (based on current production).
The company plans to augments its reserves base by ~3-4MT in FY12E. The
reserves of the company have an average Mn grade of 37% with some mines having
Mn content of ~40-42%.
Mn ore prices are also dependent on demand from ferro-alloy and therefore, steel
production. Similar to other bulk commodities, Chinese demand is critical for
Mn ore prices as the country is a producer of low-grade ore and remains short
on Mn ore. As per our China steel analyst, Chinese steel production growth is
expected to slow to ~5% over 2011-2012 (vs. 10.6% in 2010) leading to continued
demand for imported Mn ore. The muted steel production in China in 2H10 (1% y/y
growth) led to global Mn ore prices correcting by 19% over the last 2 quarters
(MOIL cut prices by ~10% in 3Q and 4Q). However, the Mn ore prices have
stabilized since Nov-10 and we expect MOIL’s Mn ore realization to remain in the
current range of Rs10-11K/MT. We believe that the low cost of production for the
company will allow it to maintain EBITDA margin levels above 65+% even at the
current subdued Mn ore price levels.
Mn ore is a raw material in the production of ferro-alloys and therefore, steel
production. Hence, a key driver for Mn ore remains the expected growth in steel
production. MOIL’s business is focused only on the growing steel industry in India
with no exposure to the export markets, therefore, domestic steel production is a key
driver for the company’s business. The planned capacity addition by steel players
over the next 2-3 years will support demand for ferro-alloys and hence Mn ore in the
country. As per the Ministry of Steel, India should achieve a total installed capacity
of 121 million tonnes by FY12 (from ~73MT currently) and further to 200 million
tonnes by 2020. We expect steel production in India to remain strong over the next
few years driven by consumption growth of 8-9% over FY12-13.
A key risk for the stock is a sharp slowdown in Chinese steel production impacting
ferro-alloy and Mn ore prices, potential changes in the mining law in India and
limited levers of volume growth in a growing steel environment.
Investment Positives
Pure play producer with a strong resource base
MOIL has a strong manganese (Mn) ore resources base in India of 61.7MT (16% of
India’s total Mn ore resources) in the 10 mines under operation in the Central India
mineral belt (MP & Mah.). MOIL’s current reserves at 22MT account for nearly 16%
of India's Mn reserves and the company plans to augment its reserves base by ~3-
4MT in FY12E. Based on the current production rate, the average mine life of
MOIL’s reserves is ~20 years. The strong resource base makes the company the
largest and only pure play manganese ore producer in India accounting for
50% of the country’s production. The total leasehold area of the resources
allocated to the company is nearly 1,800 hectares, which in our view, provides
opportunity for reserve addition through exploration. Further, area of 814.7 hectare
has been reserved by the government for MOIL and the company has applied for
prospecting license for the same.
MOIL’s reserves, in our view, remain of high quality with ~55% of proved and
probable reserves with an average Mn content of 40% (remaining are mostly
medium-grade). The company’s Balaghat mine (resources of 9MT) has reserves with
an average grade of 40%, which we consider as high grade ore. The Dongri Buzurg
mine (resources of 3MT) also has an average grade of 42% Mn content. The other
mines with relatively good grade Mn reserves are the Kandri mine and the Ukwa
mine. These mines accounted for 64% of MOIL’s production in FY10.
Domestic steel production remains key to Mn ore demand
Demand and therefore price for manganese ore is directly dependent on the
production of steel (accounts for ~90% of Mn demand globally). Mn ore is used as
an input for the production of ferro alloys, which in turn are used for steel
production.
MOIL’s business is focused only on the growing steel industry in India with no
exposure to the export markets, therefore, domestic steel production is the key
driver for the company’s business. We remain bullish on the multi-year demand
scenario of steel consumption in the country with apparent consumption growth of
8+% over the next few years, which should result in continued strong ferro-alloy
demand and thus Mn ore demand. The strong growth in steel production will be
supported by the government spending on infrastructure, auto sector demand, and
increasing consumption of consumer durables. While Mn ore realizations are driven
mostly by Chinese steel demand, the volume growth for the company could be
impacted by any slowdown in steel demand in India. We would therefore keep a
close eye on the recent slowdown in on-ground demand for steel and sign of recovery
in the domestic market.
The planned capacity addition by steel players over the next 2-3 years will support
the demand for ferro alloys and hence Mn ore in India. As per the Ministry of Steel,
India will achieve a total installed capacity of 121 million tonne by FY12 (from
~73MT currently) and increase it further to 200 million tonne by 2020. The domestic
market focus of MOIL therefore positions it favorably for the strong consumption
trends in steel in India, in our view. Moreover, MOIL’s domestic sales are likely to
be more profitable as the customer pays for the royalty and the transportation cost to
the plant.
Mn ore price – another China story
Mn ore prices, which is the key driver for profitability for MOIL, has seen a step
increase over the last few years, driven by the sharp spike in Chinese steel
production. China’s domestic Mn ore production tends to be of lower grade, and thus
while China is a large producer of the intermediary (ferro-alloys), it remains a net
importer of manganese ore and also the largest consumer of the ore. Chinese steel
production is a key catalyst for ferro-alloy, and therefore for Mn ore prices. The
impact of Chinese demand is evident in the prices of Mn ore last year when prices
recovered during the 1H 2010 (up ~35% from Jan-Jul-10) with increasing steel
production from the country’s stimulus package. However, with the power restricting
impacting steel production in the 2H of the year, prices for Mn ore have declined
~19% since Aug-10. MOIL has cut quarterly contract prices in 3Q and 4QFY11 (by
~10% over the period) given the weakness in global Mn ore prices. Our Chinese steel
analyst expects China steel production to increase by ~5% over the next two years
after 1% growth in 2H 2010.
Low cost producer
MOIL is one of the lowest cost producers of manganese ore in the world, according
to the company, with an average cost of production of $65/MT in FY10. A key
reason for the lower cost is the statutory levies (royalty & cess) and transportation
costs (domestic sales are on "free on truck" or "free on rail" basis), which are borne
by the customers. The company’s mines are located in the Central region of the
country giving it a competitive advantage. The mine location gives MOIL a
marketing advantage with its accessibility to steel and ferro-alloy manufacturing
customers located in the nearby regions (Orissa, Chhattisgarh, Jharkand).
Employee cost remains a key cost component for the company accounting for ~50%
of the total cost of mining of Mn ore. MOIL has a current employee base of 6700
people and according to the company this is expected to decline modestly to ~6500
employees over the next few years as the company takes up mechanization of its
existing mines. The company revised its wages for all employees (except executive
employees) in Aug-09 effective for a period of ten years from Aug-07 (next wage
revision due in Aug-2017). However, the DA component of employee costs is
expected to increase given the higher inflation. We are estimating employee cost/MT
to increase ~5% over the next few years.
Focusing on value addition
MOIL has also diversified into the production of value added products such as ferromanganese and electrolytic manganese dioxide (processing capacity of 900kt). These
segments are still a small portion of the company’s sales mix (4.8% of sales and
3.3% of EBITDA in FY10). MOIL's has undertaken expansion of its ferromanganese capacity (by 55kt) and will also add silico-manganese capacity (add
112.5kt) through JVs with SAIL and RINL to utilize the low/medium grade ores
produced by the company. If the total capacity of the two JVs is operated at full
utilization, it would require 0.33MT of manganese ore (22% of the 1.5MT expanded
production capacity. The JV projects should help the company by providing linkage
to the trends in the ferro-alloy industry and also helps MOIL to maintain relationship
with its end customers (steel companies).
Further, MOIL also has two manganese ore beneficiation plant (total capacity of
900kt each) at Balaghat and Dongi-Buzurg mines. The beneficiation process helps
increase the Mn content in the ore finally sold to nearly 48-49.5%. The entire
production from these mines is handled through the plants.
Expansion project to drive back-end weighted volume
growth
MOIL has outlined mining projects (deepening of existing vertical shafts and sinking
of new shafts) to increase its production capacity. The company is also developing its
open cast mines (by gradual mechanization) by induction of Heavy Earth Moving
Machinery. The capex for the various mining projects is nearly Rs7.7bn, which
would increase production capacity to at least 1.5MT by 2015 (from 1.1MT
currently). However, in our view, most of the volume growth from the projects is
expected to be back-ended (mostly post-FY13). New mines on 814 hectare reserved
were allocated by the government to MOIL in the state in Maharashtra. Some of the
mines are adjacent to the existing MOIL mines and the company has applied for a
prospecting license for the area and management expects to get the PL in the next 6-
9 months. Exploration in this area would help increase the reserve base of the
company aiding long-term production growth.
MOIL has also initiated two key JV projects with SAIL and RINL to set-up silicomanganese plants (that would utilize the low/medium grade ores) given the gradual
shift to this alloy in the production of steel. The expected investment by MOIL in
these project is ~Rs1.5bn. Silico-manganese is used extensively in the production of
long steel products, demand for which is driven by construction spending.
Flush with cash to support capex
Similar to most of the PSU mining companies, MOIL has a strong balance sheet with
no debt (Dec-10 net cash currently stands at Rs18bn or 26% of current market cap)
and robust cash flow generating business. The various mining projects outlined by
the company would require a capital outlay of Rs7.7bn (and the Rs1.5bn investment
in the JV projects), with most of the capex for long gestation projects (ranging from
3-4years). The company’s historical dividend payout is close to 20% and has a
dividend yield of 1.4%. While the company is looking at acquisition of Mn ore mines
overseas and allocation of coal or Mn ore mines in India to use its large cash balance,
we believe these are unlikely in the near-term. We believe that the strong profitability
should help MOIL generate FCF of $130-140MM in FY11-13E.
Investment negatives and risks
Weakness in the value chain: Steel demand
As the steel industry remains the single largest consumer of Mn ore (through Mn
alloy products), Mn ore prices and production tracks the global steel production.
Demand for manganese ore (contributing 94% of MOIL’s FY10 revenue and
EBITDA) is dependent on steel production, consequently linking ore prices to the
state of the steel industry. Slowdown in steel production directly impacts the offtakes
and prices of manganese ore. As seen in the recent global slowdown, global steel
production declined 8% in 2009 leading to a 61% y/y decline in average manganese
ore prices. Chinese demand is critical for Mn ore prices and it remains short on Mn
ore. The country is a producer of Mn ore, mostly very low-grade ore, and the largest
consumer given its ferro-alloy production. Therefore, a key risk to the Mn ore prices
remains a sharp slowdown in Chinese steel production impacting ferro-alloy demand.
MOIL is a mining company with strong leverage to the underlying commodity
prices (Mn ore). For example, while Mn ore realizations increased by 103% in
FY08, EBITDA increased by 280% in the same time period.
Weak ferro-alloy prices could increase alloy imports
The ferro-alloys industry in India remains highly underutilized operating at
utilization levels of 53-60%. The current capacity of ferro-alloys in India is sufficient
to meet steel production of ~220million tones vs. the current annual production of
around 60-65million tones. Additionally any sharp slowdown globally in ferro alloy
prices, could result in increasing imports into the country, which could hurt the
demand for Mn ore and prices. MOIL is undertaking forward integration projects to
expand its manganese alloy capacity to utilize its lower low/medium grade ore.
While expansion in an already underutilized industry could be a headwind for the
company during weak global environment, we think the small contribution of the
segment to MOIL’s profitability (3% of FY10 EBITDA) will limit the earnings
impact.
Regulatory risks on profitability and expansion
While MOIL is shielded from hike in royalties, export tax and freight rate (as these
costs are borne by the customers in domestic sales), any potential changes in the
mining act could impact the company. The proposed draft of the MMDRA calls for
implementation of certain provisions (like profit sharing of 26% with the local
population, etc.) could adversely impact MOIL similar to other mining companies in
India. However, the definitions, details and implementation of the draft are still
unclear.
Any delays in receiving necessary regulatory approvals and clearances from the
government to add new mines and renewal of existing mine leases could delay the
expansion plans and restrict volume growth of the miner. MOIL’s manganese ore
production is dependent significantly on the production in the Balaghat (MP) and
Dongri Buzurg (Mah.) mines. These mines account for 58% of the company’s
reserves and contributed nearly 53% of its production in FY10.
Volume growth dependent on production capacity
MOIL’s expected production for FY11 at 1.15MT nearly caps out production growth
given its current production capacity of 1.1MT. While the company has increased
focus on developing its open cast mines along with increasing capacity in the
underground mines over the medium term, much of the additional capacity will come
post FY13. In the near-term, MOIL expects production to increase in the DongariBuzurg mines and Gumgaon mine (expected to start production from 4QFY12). Any
delay in these capex could lead to lackluster volume growth. We expect
FY11/FY12E production growth of 3.5% and 5% respectively.
Rising cost of production
MOIL has seen significant increases in its mining costs primarily due to the higher
employee costs post the wage revision implemented by the company in FY09.
Employee costs have also been impacted in the last few years due to the increased
competition for skilled labor. As seven of the 10 mines operated by MOIL are
underground mines (which already have higher cost of production vs. open-cast
mines), the costs of mining are also likely to rise as mineral deposits reach deeper
horizons. We expect Mn ore cost/MT to increase by 4% over FY12-13E.
Valuation and share price analysis
MOIL has a limited trading history given its Dec-10 listing. While there are no listed
pure-play manganese companies, we have included companies with significant
exposure to manganese in its peer group. These include OM Holdings, Eramet, Vale,
ENRC and BHP Billiton. Similar companies in India like Sandur Manganese and
Iron Ore, Tata Steel, etc, either have limited trading information or use the
manganese ore produced for internal consumption.
We also broaden the valuation horizon to include the domestic steel player and
mining companies. We include steel companies given the direct linkage of the steel
industry to underlying commodity (steel sector consumes over 90% of Mn ore
produced). While the steel demand and prices have a bearing on the Mn ore prices,
we also include mining companies in the peer group, given the strong margins and
cash flow profile.
We use earnings based metrics for valuation given the underlying commodity price
environment makes DCF metric volatile. We prefer EV/EBITDA over P/E as the
former takes into account the differing financial leverage profile among companies.
Our Mar-12 PT of Rs490 is based on 6x FY12E EV/EBITDA. The target multiple
is at a 20% premium to the global mining peers (with Mn ore exposure)
primarily due to the following reasons:
• Costs of production are at the lower end of the global Mn ore cost curve
(We estimate MOIL is among the lowest cost producers of Mn ore with
a Cost/MT of $65/MT)
• A robust balance sheet with no debt and 26% of its market cap in cash.
We expect MOIL to generate FCF of $130-140mn over FY11-13E
• Focus on the domestic steel market where steel consumption is expected
to grow at 8-9% over the next few years.
We believe that the valuation premium to global peers will hold going forward,
similar to domestic miners NALCO and Coal India, as a key driver impacting MOIL
and its peer group (Assore, OMH and Eramet) is the trend in global Mn ore prices.
NALCO trades at a premium of 40% compared to global peers, while COAL trades
at a premium of 34%. The low cost of production (bottom quartile), combined with
very strong balance sheets, in our view justify a premium for India’s state owned
miners.
We expect global Mn ore prices to improve from current levels as China steel
production increases by ~5% p.a. over the next few years (versus 1% growth in
2H2010), and we expect MOIL's realizations to increase 3-7% over FY12-13E.
Unlike its peers that have various mineral assets, Mn ore is the core operation for
MOIL (contributing 94% of MOIL’s EBITDA) and we believe that a better Mn ore
pricing environment will help the company maintain its profitability given its low
and stable cost structure. Key downside risks to our rating are a slowdown in
Chinese steel demand and subsequent impact on Mn ore prices, or potential changes
in the mining law in India.
12 February 2011
MOIL – 3QFY2011 Result Update: Target Price of Rs. 426; Angel Broking
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Flat top-line performance: For 3QFY2011, MOIL reported 1.9% yoy growth in net
sales to `253cr, mainly due to higher revenue from the mining segment, which
increased by 3.8% yoy to `239cr (94% of MOIL’s net sales). The company’s
manganese ore sales volume stood at 239,000 tonnes and average blended
realisations stood at `10,005/tonne. For 4QFY2011, MOIL has lowered its prices
for some grades of manganese ore and expects realisations to remain flat qoq on
account of improvement in its product mix.
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MOIL – 3QFY2011 Result Update
Angel Broking recommend Accumulate on MOIL with a Target Price of Rs. 426
Flat top-line performance: For 3QFY2011, MOIL reported 1.9% yoy growth in net
sales to `253cr, mainly due to higher revenue from the mining segment, which
increased by 3.8% yoy to `239cr (94% of MOIL’s net sales). The company’s
manganese ore sales volume stood at 239,000 tonnes and average blended
realisations stood at `10,005/tonne. For 4QFY2011, MOIL has lowered its prices
for some grades of manganese ore and expects realisations to remain flat qoq on
account of improvement in its product mix.
10 February 2011
Result Reviews – 3QFY2011 M&M, MOIL, ABG Shipyard
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Result Reviews – 3QFY2011
Mahindra and Mahindra
Mahindra and Mahindra (M&M) reported strong 36.1% yoy (12.6% qoq) top-line growth to
`6,121cr, which was in line with our expectation and aided by a robust 32.5% yoy (11.8%
qoq) jump in overall volumes and a 2.3% yoy (2.3% qoq) increase in average net realisation.
Further, a substantial increase in other operating income at `47cr (`18cr in 3QFY2010)
supported strong growth in the top line. M&M’s total market share in the UV segment and
tractor segment during 3QFY2011 stood at 62.2% and 43.3%, respectively. The company’s
EBITDA margins for 3QFY2011 came in 29bp ahead of our estimate at 15.1%, a jump of
20bp yoy; however, it fell by 138bp qoq. Margin expansion was supported by the decline in
raw-material cost as a percentage of net sales to 62.7% v/s 64.6% in 3QFY2010. However,
raw-material cost for the quarter increased by almost 58bp qoq. Better product mix along
with higher commercial vehicle volumes, improved operating leverage and cost-control
initiatives also helped the company to save on staff costs and other expenses. M&M reported
adjusted net profit growth of 49.2% yoy to `617cr (`414cr in 3QFY2010), as against our
estimate of `611cr, aided by improved operating performance and higher other income,
which increased by 72% yoy to `41.9cr (`24.4cr in 3QFY2010).
We broadly maintain our volume and earnings estimates for the company. At `654, M&M is
trading at 15.1x FY2011E and 13.8x FY2012E standalone earnings. Owing to the recent
correction in the stock price, we recommend Buy on the stock. Our SOTP Target Price for
M&M works out to `794, wherein its core business fetches `592/share and the value of its
investments works out to `202/share.
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Result Reviews – 3QFY2011
Mahindra and Mahindra
Mahindra and Mahindra (M&M) reported strong 36.1% yoy (12.6% qoq) top-line growth to
`6,121cr, which was in line with our expectation and aided by a robust 32.5% yoy (11.8%
qoq) jump in overall volumes and a 2.3% yoy (2.3% qoq) increase in average net realisation.
Further, a substantial increase in other operating income at `47cr (`18cr in 3QFY2010)
supported strong growth in the top line. M&M’s total market share in the UV segment and
tractor segment during 3QFY2011 stood at 62.2% and 43.3%, respectively. The company’s
EBITDA margins for 3QFY2011 came in 29bp ahead of our estimate at 15.1%, a jump of
20bp yoy; however, it fell by 138bp qoq. Margin expansion was supported by the decline in
raw-material cost as a percentage of net sales to 62.7% v/s 64.6% in 3QFY2010. However,
raw-material cost for the quarter increased by almost 58bp qoq. Better product mix along
with higher commercial vehicle volumes, improved operating leverage and cost-control
initiatives also helped the company to save on staff costs and other expenses. M&M reported
adjusted net profit growth of 49.2% yoy to `617cr (`414cr in 3QFY2010), as against our
estimate of `611cr, aided by improved operating performance and higher other income,
which increased by 72% yoy to `41.9cr (`24.4cr in 3QFY2010).
We broadly maintain our volume and earnings estimates for the company. At `654, M&M is
trading at 15.1x FY2011E and 13.8x FY2012E standalone earnings. Owing to the recent
correction in the stock price, we recommend Buy on the stock. Our SOTP Target Price for
M&M works out to `794, wherein its core business fetches `592/share and the value of its
investments works out to `202/share.
11 December 2010
MOIL IPO- Application Allotment details are OUT
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Allotment is for ONLY 17 shares at 5% discount to issue price of Rs 375 at RS 356.25/ share
=> Rs 6, 056.25 deducted from ASBA
MOIL IPO allotment Ratios and Basis:: Manganese Ore India Limited
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Allocation details by application number to be release tonight.. Keep Visiting site:
MOIL will come as option in drop down menu for COMPANY in the section below soon
update: Karvy has UPDATED details (12 noon India time, 11th Dec.)
Allotment is for ONLY 17 shares at 5% discount to issue price of Rs 375 at RS 356.25/ share
=> Rs 6, 056.25 deducted from ASBA
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Allocation details by application number to be release tonight.. Keep Visiting site:
MOIL will come as option in drop down menu for COMPANY in the section below soon
update: Karvy has UPDATED details (12 noon India time, 11th Dec.)
Allotment is for ONLY 17 shares at 5% discount to issue price of Rs 375 at RS 356.25/ share
=> Rs 6, 056.25 deducted from ASBA
| Applied Lot | Shares Applied for | Allotted Shares | Ratio Of Allotment | Probabilty of Getting Share |
| 1 | 17 | 17 | 1 out of 31 | 3% |
| 2 | 34 | 17 | 3 out of 47 | 6% |
| 3 | 51 | 17 | 2 out of 21 | 10% |
| 4 | 68 | 17 | 6 out of 47 | 13% |
| 5 | 85 | 17 | 6 out of 37 | 16% |
| 6 | 102 | 17 | 6 out of 31 | 19% |
| 7 | 119 | 17 | 7 out of 31 | 23% |
| 8 | 136 | 17 | 8 out of 31 | 26% |
| 9 | 153 | 17 | 9 out of 31 | 29% |
| 10 | 170 | 17 | 10 out of 31 | 32% |
| 11 | 187 | 17 | 6 out of 17 | 35% |
| 12 | 204 | 17 | 13 out of 34 | 38% |
| 13 | 221 | 17 | 13 out of 31 | 42% |
| 14 | 238 | 17 | 15 out of 34 | 44% |
| 15 | 255 | 17 | 9 out of 19 | 47% |
| 16 | 272 | 17 | 1 out of 02 | 50% |
| 17 | 289 | 17 | 19 out of 35 | 54% |
| 18 | 306 | 17 | 19 out of 33 | 58% |
| 19 | 323 | 17 | 20 out of 33 | 61% |
| 20 | 340 | 17 | 7 out of 11 | 64% |
| 21 | 357 | 17 | 2 out of 03 | 67% |
| 22 | 374 | 17 | 23 out of 33 | 70% |
| 23 | 391 | 17 | 8 out of 11 | 73% |
| 24 | 408 | 17 | 29 out of 38 | 76% |
| 25 | 425 | 17 | 26 out of 33 | 79% |
| 26 | 442 | 17 | 43 out of 53 | 81% |
| 27 | 459 | 17 | 28 out of 33 | 85% |
| 28 | 476 | 17 | 51 out of 58 | 88% |
| 29 | 493 | 17 | 10 out of 11 | 91% |
| 30 | 510 | 17 | 31 out of 33 | 94% |
| 31 | 527 | 17 | 49 out of 50 | 98% |
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