Dolat Capital is bullish on MOIL and has recommended accumulate rating on the stock with a target of Rs 282 in its November 12, 2012 research report.
“MOIL sales at Rs 2.29bn (-7.6%YoY/-5.4%QoQ) were lower than our estimate of Rs 2.42bn primarily due to lower than expected volumes which fell by 11.8%YoY/ 24.1%QoQ to 239kt (DCe279kt). Sales volumes were lower as company only sold 36kt of fines vs 69.9kt in Q1FY13. Realizations improved by 24.7%QoQ/ 6.1%YoY to Rs 8650 per tonne as a result of the price increases taken in Q2FY13 and lower amount of fines sold during the quarter. Production of Mn ore increased by 3.7%YoY to 487kt in H1FY13 but was largely on back of increase in low grade fines which increased by 17.5% to 106kt. Ferrograde and low grade silica ore production declined by 1.23% and 15.66% to 224kt and 151.5kt respectively.”
“EBITDA declined by 2.7%YoY to Rs1.08bn (DCe: Rs 1.1bn) but improved sequentially by 5.7%. However we were surprised by the increase in employee cost which increased by 6.3%YoY/5.7%QoQ to Rs 651mn. Margins improved to 47.4% (500bpsYoY/240bps QoQ) due to higher realisations. Other income increased by 24.3%YoY/12.5%QoQ to Rs 588mn. PAT improved by 7.6%YoY/ 9.3%QoQ to Rs 1087mn (DCe: Rs 1110mn) due to higher realisations. MOIL has maintained the prices for Q3FY13 given the subdued demand. It has maintained its volume targets for the year. BHP has maintained the prices for Q4CY12 globally.”
“We have maintained our estimates for FY13E and FY14E and would review our estimates post the interaction with the managemen. MOIL is currently trading at 4.2xFY13EV/EBITDA and 3.6xFY14EV/EBITDA. We maintain our accumulate rating on the stock with the price target of Rs 282(5x FY14 EV/EBITDA),” says Dolat Capital research report.
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