MOIL delivered a disappointing quarter with volumes at 254kT (5.0% YoY, -33.3% QoQ), a disappointment given earlier indications of contracted quantity at 391kT for 1QFY17. EBITDA margins at 18.6% (44.0% in 1QFY16, loss in 4QFY16) remain depressed. Mn ore prices have been volatile with sharp jump seen in mid-August (23% in a week, 63% in a month). Current prices of US$4.46/dmtu look high given some of the Chinese demand may be temporary, but should help MOIL hike prices when it appraises its pricing next. We believe US$2.75-3.00 is a more sustainable price range given slightly more than 50% capacity is profitable at those prices.

Despite the impending buyback (~20% of outstanding equity), cash will still form a large proportion of the market cap (62% of FY17E cash balance), implying lower stock price sensitivity to changes in business environment. Maintain Neutral with a TP of Rs 242/sh (5.0x FY18 EV/EBITDA).