MOIL (Q3 FY14)

India Infoline News Service | Mumbai |

Operating profit for the quarter jumped 19.1% yoy to Rs1.4bn, inline with our estimate. The impact of higher realisations was offset by increase in costs per ton.

CMP Rs224, Target Rs250, Upside 11.6%
  • MOIL managed to register operationally inline performance. The outperformance in bottomline was on account of higher other income. A reversal of Rs440mn for provisions made earlier was included in other income. A higher than expected increase in realisations led to a marginal outperformance in topline. Topline for the quarter stood at Rs2.6bn, higher by 15.5% yoy and 16.2% qoq. The jump in topline was led by both, higher sales volume and higher realisations, on a yoy basis. Sales volume of 0.29mn tons was 2.7% higher on a yoy basis, but production was lower by 0.7% yoy to 0.31mn tons. Realisations improved 6.5% yoy and 3.5% qoq after the price hikes announced by the company at the start of the quarter. The improvement in realisations on a qoq basis was curtailed by higher share of fines of total sales volume.

  • Operating profit for the quarter jumped 19.1% yoy to Rs1.4bn, inline with our estimate. The impact of higher realisations was offset by increase in costs per ton. Costs increased 10% yoy due to higher diesel prices. EBIDTA/ton of manganese ore increased sharply from Rs3,304/ton in Q2 FY14 and Rs4,060/ton in Q3 FY13 to Rs4,708/ton in Q3 FY14.

Cost Analysis
  Q3 FY14 Q3 FY13 % yoy Q2 FY14 % qoq
Material costs 1.3 (2.5) 384 11.0 (963)
Personnel Costs 24.5 26.7 (222) 29.9 (538)
Other overheads 22.2 25.4 (320) 21.9 33
Total costs 48.1 49.7 (158) 62.8 (1,468)
Source: Company, India Infoline Research

Quarterly volume and price trend
  Q3 FY14 Q3 FY13 % yoy Q2 FY14 % qoq
Manganese production 311,777 314,000   (0.7) 231,059   34.9
Manganese sales 290,611 282,909   2.7 255,389   13.8
Blended realisations 8,163 7,668   6.5 7,886   3.5
Blended EBIDTA/ton 4,708 4,060   16.0 3,304   42.5
Source: Company, India Infoline Research
  • MOIL has managed to increase its realizations over the last two quarters. We are positively surprised by the ability of the company to hold prices. The management has mentioned that market share in FY13 increased to 50% from 42% in FY12. It expects to hold prices in the near term. Management has guided for a capex estimate of Rs2bn for FY14 and Rs4bn in FY15. At the end of Q2 FY14, the company had cash reserves of Rs27bn, accounting for 67% of current market cap. We expect the company's cash reserves to increase to Rs27.9bn in FY15 (74% of current Mcap) even after incurring the above mentioned capex. MOIL is currently trading at 2.4x FY15E EV/EBIDTA, which is at huge discount to its historical average of 5.8x and also to its international peers. We value the company at 4x FY15E EV/EBIDTA and arrive at a revised price target of Rs250.
Results table
(Rs m) Q3FY14 Q3 FY13 % yoy Q2 FY14 % qoq
Net sales 2,636 2,283 15.5 2,268 16.2
Material costs (35) 57 (162.0) (249) (85.8)
Personnel costs (646) (610) 5.9 (678) (4.7)
Other overheads (586) (581) 0.9 (497) 18.0
Operating profit 1,368 1,149 19.1 844 62.1
OPM (%) 51.9 50.3 158 bps 37.2 1468 bps
Depreciation (90) (84) 6.3 (85) 5.2
Other income 1,135 640 77.2 585 93.8
PBT 2,413 1,705 41.6 1,344 79.5
Tax (837) (569) 47.2 (439) 90.9
Effective tax rate (%) 34.7 33.4 32.6
Adjusted PAT 1,576 1,136 38.7 906 74.0
Adj. PAT margin (%) 59.8 49.8 1,002 bps 39.9 1,986 bps
Reported PAT 1,576 1,136 38.7 906 74.0
Ann. EPS (Rs) 37.5 27.0 38.7 21.6 74.0
Source: Company, India Infoline Research

Financial summary
Y/e 31 Mar (Rs mn) FY13 FY14E FY15E FY16E
Revenues 9,671 9,090 9,404 9,731
yoy growth (%) 7.5 (6.0) 3.5 3.5
Operating profit 4,345 3,867 3,981 4,099
OPM (%) 44.9 42.5 42.3 42.1
Pre-exceptional PAT 4,317 4,216 4,552 4,930
Reported PAT 4,317 4,216 4,552 4,930
yoy growth (%) 5.1 (2.3) 8.0 8.3
         
EPS (Rs)* 25.7 25.1 27.1 29.3
P/E (x) 8.7 8.9 8.3 7.6
Price/Book (x) 1.4 1.2 1.1 1.0
EV/EBITDA (x) 3.4 2.7 2.4 1.8
Cash per Share (Rs) 135.5 161.1 166.2 180.7
RoE (%) 16.6 14.4 14.0 13.7
RoCE (%) 24.5 21.3 20.6 20.1
Source: Company, India Infoline Research,* Adjusted for Bonus & Split

***Note: This is a NSE Chart

 

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