MOIL Ltd. share price target

We maintain our recommendation and TP of 445/sh (5.0x June 19 EV/EBITDA). MOIL's revenues were ahead of estimates (5.6% beat), driven by better volumes (307 kT, 20.9% YoY, 42.1% QoQ). However, EBITDA missed estimates (Rs 1.21bn vs est 1.61bn, 3.5x/flat YoY/QoQ), owing to lower realisations (Rs 9,628/t, 49.9/-14.9% YoY/QoQ, est Rs 11,739), higher other expenses and employee costs (12.4/2.2% YoY/QoQ). Inventory liquidation (39kT, mostly lower grades) drove lower realisations and higher sales volumes. Despite the miss, this is another strong quarter, given the Rs 1.2bn EBITDA run-rate. The board declared a 1:1 bonus as well.

Mixed Quarterly Performance; Volume to Remain Strong MOIL has reported a mixed performance in 4QFY17. Its blended sales realisation zoomed 119% YoY and 20.4% QoQ to Rs11,309/tonne (vs. our estimate Rs9,250), while sales volume fell by 43% YoY and 38% QoQ to 2.16 lakh tonne vs. our estimate of 3.55 lakh tonne. Notably, MOIL liquidated substantial inventory in 3QFY17, as production at 2.72 lakh lagged sales by a wide margin. Though its EBITDA declined by 7% QoQ to Rs1.21bn (vs. Rs57mn loss in 4QFY16), EBITDA margins rose by 1,134bps YoY to 48.2% (vs. our estimate of 39.8%). Adjusted PAT surged by 442% YoY and 14.2% QoQ to Rs1.15bn (vs. our estimate of Rs1.28bn) despite other income rising...

MOIL continued its strong delivery (EBITDA: Rs1.22bn, -11% QoQ, YoY Not comparable due to loss). Non-fines pricing was stronger QoQ (Rs 13,474/t 2.4x YoY, 29% YoY) and this could likely be due to a better mix. Volumes were lower than estimates (216kT, -43% YoY, -39% QoQ), as MOIL pricing was higher than imports for a considerable period in the quarter, before it could respond to sharp global pricing changes.

Revenue stood at Rs 2.53 bn (+20%/+29% YoY), significantly lower than our estimates of Rs 3.7 bn primarily on lower sales volume of 0.22 mt vs our estimate of 0.32 mt. Blended realizations stood at Rs 11,410/ tonne,more than 2x YoY and up 22% QoQ EBITDA came at Rs 1.22 bn, (vs Rs 57 mn loss in Q4FY16/-7% QoQ). This was lower than our estimate of Rs 1.5 bn. EBITDA margin however improved to 48%, up 1134 bps QoQ. Blended EBITDA/ tonne stood at Rs 5637, c. 50% higher on QoQ basis YoY and 66% QoQ to Rs 660 mn. Declared final dividend of Rs 6 per share takes total dividend to be Rs 11/share for FY17, highest so far...

MOIL has cut prices for its April deliveries by 15% (for grades higher than 44% Mn) and 10% (for others). This was expected, as its prices were at a premium to global prices. Benchmark (44% Mn, CIF China) prices slipped to USD 4.15/dmtu in March-end from USD9 in early January.

Sales volumes zoomed by 154% YoY and 12% QoQ to 348,000 tonne. The global manganese ore prices remained under pressure in CY15 and 1HCY16 due to oversupply, but measures i.e. downsizing production and planned shut-down of high-cost mines aided the prices to stabilize. Further, increased demand in China and improved sentiment also helped manganese ore prices, which started recovering significantly. Global manganese ore prices have almost trebled since Aug'16. Due to strong demand in China, overseas offers for India fell sharply which helped the domestic prices benefiting MOIL, being the supplier of...

MOIL delivered strong numbers in 3QFY17 (Revenue/EBITDA 4/9x YoY to Rs 3.55/1.37 bn respectively). This was driven by both strong pricing (Rs 9,365, 65.1% YoY, 62.7% QoQ) and volumes (348 kT, 155.9% YoY, 11.9% QoQ). Supplies from South Africa were restricted due to rail bottlenecks, while traders in Chinese ports stocked up.

share, wherein retail investor will get 5% discount on the cut-off price. *Based on floor price, 10% equity stake sale Post the OFS, out of the three promoters, the stake of Government of...

MOILs headline EBITDA of Rs 24mn (-87.6% YoY, -92.9% QoQ) was disappointing (our estimates: Rs 196mn), despite strong revenue growth (Rs 1.96bn, 31.1% YoY, 5.5% QoQ). This was due to drawdown of low value inventory (Rs 506 mn,-40mn in 2QFY16, 42mn in 1QFY17). MOILs operating costs are largely fixed and it had built large inventory of ore (0.287mT at June 2016 end). ~38% of this got liquidated in 2QFY17.

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).