Dear All,
Forwarding you the Result Update on MOIL for 4QFY2011 with a Neutral Recommendation.
MOIL reported disappointing set of numbers for 4QFY2011. Net sales came in at `252cr vs. our expectation of `354cr. Net profit of `132cr was also below our expectation of `180cr. The disappointment was mainly on account of lower-than-expected sales volume. We recommend Neutral on the stock.
Disappointing performance: MOIL’s net sales for the quarter declined by 13.7% yoy to `252cr on account of lower sales volume and realisation. Manganese ore sales volume for the quarter stood at 260kt and average blended realisations stood at `9,376/tonne; for 1QFY2012, the company has reduced ferro grade prices by nearly ~23%. During the quarter, EBITDA declined by 19.6% yoy to `160cr due to poor top-line performance. Margin dipped by 461bp yoy as other expenditure increased by 49.5% yoy to `52cr (20.7% of net sales in 4QFY2011 vs. 11.9% of net sales in 4QFY2010). Depreciation increased by 78.3% yoy to `12cr, but other income grew by 65.7% yoy to `50cr. Consequently, net profit declined by only 8.5% yoy to `132cr.
Outlook and valuation: Manganese ore prices have gradually slumped by over 20.0% during April–May 2011, while the company has built-up inventory of 180,000 tonnes as of March 31, 2011. The company is expanding its production capacity at existing mines to 1.5mn tonnes by CY2015 from 1.0mn tonnes in FY2011. However, given the recent slump in manganese ore prices, we expect margins to contract during FY2012 and FY2013. Hence, we reduce our profitability estimates and recommend Neutral on the stock with a fair price of `358, valuing it at 5.0x FY2013E EV/EBITDA.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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