Hold MOIL; target of Rs 163: Emkay Global Financial

Emkay Global Financial's report on MOIL

MOIL's expansion plans have been delayed for at least 5 to 6 months, assuming that the lockdown is over by August 31 and work resumes normally. However, in case normalcy is not restored by then, the expansion plan may be delayed further, eluding volume growth. Q1 beat our estimates. EBITDA/t of ₹3,330/t (yoy/qoq:-15%/+15x) was significantly ahead of our estimate of (-) 3,086/t, primarily driven by negative RM costs. Other operating expense was also low but will pick up on higher volumes going forward. Manganese Ore port stocks in China are still higher than the threshold of 4mt level, indicating weakness in near-term pricing. With resumption of mining operations in S. Africa, we believe that oversupply in the domestic market may continue for a while.

Outlook

We have increased our FY21E EBITDA by 27% due to strong Q1. We have tweaked our EBITDA estimates for FY22/23 marginally to reflect a small uptick in our TP from Rs160 to Rs163 at 4x FY22E EBITDA. Net cash of Rs 74/sh provides support to the stock, but the lack of near term trigger restricts upside. We maintain Hold.

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