MOIL can move to Rs 300: SP Tulsian

Tulsian told CNBC-TV18, "This is an interesting play, exactly one year back when in the last week of November the IPO of the company came at Rs 375 and now it is ruling at Rs 230; an erosion of about 40%. If you see at that point of time I don’t think that any analysts have given a negative call on the stock and in fact the rating to IPO was also 5 out of 5."

He further added, "They have 50% market share and it is largest manganese ore maker in the country. The manganese ore is used for making Ferro Alloys which is used in steel production. If I compare with the financial performance of FY11, then FY11 has an EPS of Rs 35 and first half EPS is at Rs 12.50 and so extrapolating the same, I expect FY12 EPS to be at Rs 20 against Rs 35 of FY11 EPS. So there is a drop of about 30% but the share has already seen an erosion of 40%."

"If I take a call on financial performance, I don’t think that you will find such a clean balance sheet in any of the PSU basket, which we have been hearing the noise of share buyback or cross holding. Simply just to put the financials in perspective - the net current assets of the company is at Rs 2090 crore and out of that Rs 2070 crore is held as cash. Because generally we were only seeing that cash balance of all this PSUs in isolation, while it should be read along with the net current assets and if the net current assets are slightly more than cash balance then any company can really fall back on that cash balance and this Rs 270 crore cash balance works out to Rs 125 per share."
 
"So out of this Rs 230 if I knock out Rs 125 it gives me a core valuation of Rs 105 and EPS of Rs 25 is expected, so that gives a PE multiple of 4. So considering the overall stainless steel prices, I think the manganese ore prices looks to have bottomed out and even the royalty burden of the company is quite low at Rs 70 crore. But because stock has been continuously going down nobody is taking a call on the stock but in my view it looks to have bottomed out maybe a fall of about Rs 10-15 from here on but it can move back to Rs 300 in next 6-7 months."