Moneycontrol Research's Diwali Portfolio: Moil to replace IRB Infrastructure

As a part of that exercise we are recommending a change in the portfolio whereby MOIL replaces IRB Infrastructure.

Moneycontrol Research

December 07, 2017 / 17:46 IST

26 Aug, 2025 12:21

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Moneycontrol Research

Our Diwali Portfolio has generated an alpha of 16.9 percent in little over fifty days. In our endeavour to generate superior return for our investors, we scrutinise every position carefully. As a part of that exercise we are recommending a change in the portfolio whereby MOIL (Managanese Ore India Ltd) replaces IRB Infrastructure.

Since the time we recommended IRB Infrastructure in our Diwali Picks Portfolio at Rs 206 per share, it has corrected by almost 1.4 percent. While we remain positive about the structural story in the road sector and the strength of the company in terms of the balance sheet, execution capabilities and strong cash flows, we are replacing IRB Infrastructure with MOIL in light of the legal risk emerging in IRB post CBI filing a charge sheet against its Chairman and Managing Director Virendra Mhaiskar and 17 others in the case of land acquisition. The company in its statement to exchanges has denied all the allegations and has reassured its cooperation with the authorities.

Post the significant correction in stock price, the state-owned company MOIL is looking attractive as the stock is now trading at 10 times its FY19 estimated earnings offering a 3.5 percent dividend yield based on FY19 estimates. MOIL, the largest manganese ore producer in India, is amongst very few commodity businesses that commands high core business return on equity in excess of 30 percent. It is a debt-free company consistently making high positive operating cash. The company is benefiting because of the higher manganese prices as a result of pick-up in domestic steel production. Recently in the month of October, the company has taken a price hike and benefit of the same will be reflected over the next two quarters.