Sharekhan's research report on MOIL
MOIL Limited’s (MOIL) Q2FY2023 results disappointed as PAT of Rs. 25 crores (down 59% y-o-y/76% q-o-q) sharply missed our estimate on account of lower-than-expected volume/margin and lower other income which got partially offset by lower tax rate. Manganese ore sales volume declined by 22% y-o-y/27% q-o-q to 0.21 mt, as Q2 is a seasonally weak quarter because mine production gets impacted during monsoon season. Weak EBITDA margin of Rs. 1,606/tonne (down 69% q-o-q) missed our estimate as realisation was impacted by price cuts. MOIL has taken net price cut of 20% in Q2FY2023 and has further reduced its manganese ore price by 10%/7.5% in October/November to reflect weak international manganese ore price, given subdued global steel demand environment. We expect volumes to improve in H2FY23 post the monsoon season.
We maintain our Buy rating on MOIL with a revised PT of Rs. 185, given reasonable valuations of 3.1x its FY2024E EV/EBITDA, dividend yield of 5%, and high cash on books. Likely removal of steel export tax could improve sentiments for the sector.