MOIL (Q3 FY14)
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.
Feb 15, 2014 11:02 IST India Infoline News Service
CMP Rs224, Target Rs250, Upside 11.6%
Source: Company, India Infoline Research
Quarterly volume and price trend
Source: Company, India Infoline Research
Source: Company, India Infoline Research
Financial summary
Source: Company, India Infoline Research,* Adjusted for Bonus & Split
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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.
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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.
| 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) | |
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 | |
- 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.
| (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 |
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 |
