Accumulate MOIL; target of Rs 282: Dolat Capital

Dolat Capital is bullish on MOIL and has recommended accumulate rating on the stock with a target of Rs 282 in its February 6, 2013 research report.
 
“MOIL sales at Rs 2.28bn (-4.7%YoY/-0.5%QoQ) were lower than our estimate of Rs 2.45bn primarily due to lower than expected realisations which fell by 1.4%YoY/ 12.7%QoQ to 239kt (DCe: Rs 8055 per tonne). Realizations were lower as company sold 74.1kt of fines (25% of sales) vs 36kt in Q2FY13 (15% of sales). Sales volumes fell by 0.9%YoY to 282kt whereas production rose by 10.5%YoY to 315kt.Ferro manganese sales declined by 53%YoY/37%QoQ to Rs 108mn due to weak demand whereas wind power sales fell by 71.8%QoQ to Rs 16mn due to seasonality.”
 
“EBITDA rose by 4.9%YoY/6.2%QoQ to Rs 1.14bn (DCe: Rs 1.16bn). Margins improved to 50.3% (460bpsYoY/320bps QoQ) due to higher realisations. Other income increased by 28.6%YoY/8.9%QoQ to Rs 644mn. PAT improved by 11.8%YoY/4.4%QoQ to Rs 1.13bn (DCe: Rs 1.05mn) due to higher than expected other income. MOIL has reduced the prices for Q4FY13 given the subdued demand and fall in international prices. MOIL prices are currently at 5% premium to the landed prices of the imported ore. It has maintained its volume targets for the year. BHP has maintained the prices for Q4CY12 globally. We have largely maintain our estimates for FY13E and FY14E and introduce FY15E. MOIL is currently trading at 3.5xFY13EV/EBITDA and 3xFY14EV/ EBITDA. We maintain our Accumulate rating on the stock with a revised price target of Rs 282(4.5x FY14 EV/EBITDA) given the cheap valuations,” says Dolat Capital research report.

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