IndiaEquityResearch

Mining

February6,2013

ADD

MOIL

Target(INR)288

Cutinorepricesfor4QFY13fleadstoearningsdowngrade

Rating

MOILs Dec12 EBITDA was in line with estimates at INR1.14bn.

However, higher other income boosted net profit, which stood at
INR1.13bn compared to our estimates of INR1.07bn. Manganese ore
prices have been reduced for the quarter ended Mar13f by 5%
compared to our estimates of remaining stable. This has led us to
lowerourFY13fFY15fEBITDAby5%andnetprofitestimatesby3.5%.
WecutourDec13TPtoINR288basedonthehistoricalaverage(Jan12
Feb13) P/E and EV/EBITDA multiple. Cash and cash equivalents of
INR145/share, as on Dec12, cushions a downside. Correction in the
stockpriceduringthelastonemonthledustomaintainanAddrating.

LastPrice(INR)

253.3

Bloombergcode

MOILIN

Reuterscode

MOIL.BO

Avg.Vol.(3m)

80,522

Avg.Val.(3m)(INRmn)

20.7

52wkH/L(INR)

300/226
19,660

Sensex
MCAP(INRbn/USDmn)

42.55/801

Shareholding(%)

09/12

12/12

Promoters

80.0

80.0

MFs,FIs,Banks

2.8

2.8

Cutinorepricesfor4QFY13fby5%leadstoearningsdowngrade

FIIs

5.7

6.1

Public
Others

9.4
2.1

9.2
1.9

Reduction in the manganese ore prices by 5% for Jan13Mar13f against our

expectationofremainingstablehasledustocutourFY13fFY15frevenueby
2.5%andEBITDA estimatesby 5%.The reduction inthedomesticmanganese
ore prices has been despite a 4% increase in international ore prices. We
forecastthemanganeseorepricestorise5%from1QFY14ftorealigndomestic
priceswithinternationalprices.

StockChart(RelativetoSensex)
325

EBITDAinlinewithestimates,netprofitboostedbyotherincome

300

EBITDA for the quarter ended Dec12 stood at INR1.14bn in line with our
estimates. Sales volume declined 0.9% yoy, whereas realisations rose 1.4%
due to better manganese ore prices. Other income increased 28.6% yoy to
INR640mn, against our estimates of INR550mn, due to higher cash and bank
balanceaswellasimprovedyieldoninvestments.Thenetprofitwentup11.9%
yoytoINR1.13bn.

275

250

225
Feb12

Jun12

Oct12

MOIL

Feb13

Sensex Rebased

MaintainAddratingwithDec13TPofINR288
WecutourEPSforecastforFY13fFY15fby3.5%,aswereduceourrealisation
estimatesby2.5%.Wevaluethestockbasedonthehistoricalaverage(Jan12
Feb13)EV/EBITDAof4.3xandP/Emultipleof10x.OurDec13targetofINR288
is the average of the fair values arrived based on these historical multiples.
CashandcashequivalentsofINR24bn(INR145/share),asonDec12,islikelyto
restrictthedownsideinstock.WemaintainourAddrating.Riskfactorsinclude
adeclineininternationalmanganeseorepricesandlowersalesvolume.

StockPerfm.(%)

1m

3m

1yr

Absolute

3.7

2.0

7.8

Rel.toSensex

3.1

2.7

19.5

Financials(INRmn)

03/12

03/13f

03/14f

Sales

8,996

9,189

9,879

21

48.2

46.7

47.6

4,108

4,246

4,555

Sho/s(diluted)

168

168

168

A.EPS(INR)

24.5

25.3

27.1

YoY(%)
EBITDA(%)
A.PAT

YoY(%)

30

D/E(x)

0.9

0.9

0.8

P/E(x)

11.0

10.7

9.9

EV/E(x)

5.4

4.7

4.2

RoCE(%)
RoE(%)

18
18

16
16

16
16

QuarterlyTrends
Sales(INRmn)
PAT(INRmn)

03/12

06/12

09/12

12/12

2,016

2,426

2,295

2,283

993

994

1,087

1,136

Pleaserefertothedisclaimertowardstheendofthedocument.

Earningsrevisionsummary
(INRmn)
Revenue
EBITDA
PAT
EPS(INR)

FY13f FY14f FY15f

Old
New Var(%)
Old
New Var(%)
Old
New Var(%)
9,428 9,189
2.5 10,136
9,879
2.5 10,737 10,464
2.5
4,521 4,291
5.1
4,949
4,701
5.0 5,276 5,013
5.0
4,400 4,246
3.5
4,721
4,595
2.7 4,964 4,882
1.7
26.2
25.3
3.5
28.1
27.4
2.7
29.5
29.1
1.7

Source:Company,AvendusResearch

JimeshSanghvi,+9102266842859
Jimesh.sanghvi@avendus.com

India Equity Research

MOIL

Exhibit1: ResultsnapshotfortheDec12quarter
(INRmn)

Dec11

Sep12

Qoq(%)

Dec12

Yoy(%)

Totaloperatingincome

2,395.4

2,294.6

0.5

2,282.7

4.7

Totaloperatingexpenses

1,300.8

1,213.5

6.5

1,134.5

12.8

EBITDA

1,094.6

1,081.1

6.2

1,148.2

4.9

498.0

588.0

8.9

640.4

28.6

72.8

83.8

0.5

84.2

15.7

1,519.8

1,585.3

7.5

1,704.4

12.1

Otherincome
Depreciation
EBIT
Interest
RecurringPBT
Netextraordinaryitems
PBT(reported)
Totaltaxes

0.0

0.0

0.0

1,519.8

1,585.3

7.5

1,704.4

0.0

0.0

0.0

1,519.8

1,585.3

7.5

1,704.4

12.1

504.8

498.7

14.0

568.6

12.6
11.9

1,015.0

1,086.5

4.5

1,135.8

(+)Shareinassoc.earnings

0.0

0.0

0.0

Less:Minorityinterest

0.0

0.0

0.0

Priorperioditems

0.0

0.0

0.0

1,015.0

1,086.5

4.5

1,135.8

6.0

6.5

4.5

6.8

PAT(reported)

Netincome(reported)
EPS(INR)
Operatingratios(%)

12.1

11.9
11.9

EBITDAmargin

45.7

47.1

3.2

50.3

4.6

EBITmargin

52.5

55.0

3.3

58.3

5.8

Netprofitmargin

35.1

37.7

1.2

38.9

3.8

Source:Company,AvendusResearch

Exhibit2: Financialsandvaluations

Incomestatement(INRmn)

Balancesheet(INRmn)

Fiscalyearending
Totaloperatingincome
EBITDA
Otherincome
Depreciation
EBIT
Interest
Netextraordinaryitems
PBT(reported)
Totaltaxes
PAT(reported)
(+)Shareinassoc.earnings
Less:Minorityinterest
Priorperioditems
Netincome(reported)
Avendusnetincome
Avendusdil.shares(mn)
AvendusEPS(INR)

Fiscalyearending
Networth
Minorityinterest
Totaldebt
Deferredtaxliability
Totalliabilities
Netblock
CWIP
Goodwill
Investments
Cash
Inventories
Debtors
Loansandadvances
less:Currentliabilities
less:Provisions
Networkingcapital
Totalassets

03/12
03/13f
03/14f
03/15f
8,996
9,189
9,879
10,464
4,332
4,291
4,701
5,013
2,033
2,440
2,684
2,952
299
394
526
679
6,066
6,337
6,859
7,286
0
0
0
0

6,066
6,337
6,859
7,286
1,959
2,091
2,263
2,404
4,108
4,246
4,595
4,882

0
0
0
0

4,108
4,246
4,595
4,882
4,108
4,246
4,595
4,882
168
168
168
168
24.5
25.3
27.4
29.1

Cashflowstatement(INRmn)
Fiscalyearending
Netprofit+Depreciation
Deferredtax
Workingcapitalchanges
Less:Otherincome
Cashflowfromoperations
Capitalexpenditure
Others
Cashflowfrominvesting
Equityraised
Changeinborrowings
Dividendspaid(incl.tax)

03/12
4,407
0
621
2,033

KeyRatios
03/13f
4,640
0
1,074
2,440

03/14f
5,121
0
77
2,684

03/15f
5,561
0
91
2,952

1,753
3,274
2,515
2,700
364
1,410
1,930
1,952
1,806
2,832
2,639
2,914
1,442
1,422
709
962

0
0
0
0
978
1,369
1,369
1,369

Others
Cashflowfromfinancing
Netchangeincash

130
1,108
2,088

03/12
03/13f
03/14f
03/15f
24,413
27,290
30,517
34,030

0
0
0
0
67
67
67
67
24,347
27,224
30,450
33,963
2,070
3,067
4,451
5,702
390
410
430
452

42
42
42
42
20,884
24,212
26,066
28,359
813
504
541
573
993
629
677
717
2,173
1,792
1,849
1,899
1,698
1,718
1,794
1,874
1,321
1,714
1,812
1,908
21,844
23,705
25,526
27,767
24,347
27,224
30,450
33,963

0
1,369
3,327

0
1,369
1,854

0
1,369
2,293

Fiscalyearending
P/E(onAvendusEPS)
P/BV
EV/Sales
EV/EBITDA

03/12
10.3
1.7
2.3
4.7

03/13f
10.0
1.6
1.9
4.1

03/14f
9.2
1.4
1.6
3.3

03/15f
8.7
1.2
1.3
2.7

ROCE
ROE
EBITDAmargin
Netprofitmargin
Operatingincomeyoy
AvendusEPSyoy
Grossassetturnover

18.0
18.0
48.2
37.2
21.1
30.1
2.1

16.5
16.4
46.7
36.5
2.1
3.4
1.6

15.9
15.9
47.6
36.6
7.5
8.2
1.3

15.2
15.1
47.9
36.4
5.9
6.2
1.1

Workingcapitalcycle(days)
Netdebttoequity
NetdebttoEBITDA

13.8
0.9
0.0

22.5
0.9
0.0

42.2
0.9
0.0

42.8
0.9
0.0

Source:Company,AvendusResearch

Mining

India Equity Research

MOIL

Exhibit3: OneyearforwardP/E(x)

Exhibit4: OneyearforwardEV/EBITDA(INR)

11.75

6.00
ActualP/E

EV/EBITDA

AverageP/E

11.00

5.25

10.25

4.50

9.50

3.75

8.75
Jan12

May12

Aug12

Dec12

Source:Bloomberg,AvendusResearch

Apr13

Aug13

Dec13

3.00
Jan12

May12

Aug12

Dec12

AverageEV/EBITDA

Apr13

Aug13

Dec13

Source:Bloomberg,AvendusResearch

Exhibit5: Pertonneanalysis

Dec11

Sep12

Qoq(%)

Dec12

Yoy(%)

285,554

238,405

18.7

282,909

0.9

Realisations(INR/tonne)

7,623

8,874

12.9

7,730

1.4

EBITDA(INR/tonne)

3,833

4,535

10.5

4,059

5.9

Salesvolumes(tonnes)

Source:Company,AvendusResearch

Mining

India Equity Research

MOIL

AnalystCertification
Thefollowinganalyst(s)is(are)primarilyresponsibleforthisreportand,certifies(y)thattheopinion(s)onthesubjectcompany(ies)anditssecurity(ies)andanyotherviewsor
forecastsexpressedhereinaccuratelyreflecttheirpersonalview(s).Theyfurthercertifythatnopartoftheircompensationwas,isorwillbedirectlyorindirectlyrelatedtothe
specificrecommendation(s)orviewscontainedinthisresearchreport:JimeshSanghvi

Disclosures
MeaningofAvendusSecuritiesPrivateLimitedsequityresearchratings
Theratingrepresentstheexpectedchangeinthepriceofthestockoverahorizonof12months.
Buy:morethan+20%

Add:+10%to+20%

Hold:10%to+10%

Reduce:10%to20%

Sell:lessthan20%

Proportionofratingsineachcategoryandinvestmentbankingrelationships(%)
AttheendofDec2012

Buy

Add

Hold Reduce

Sell

NR

Total

Proportionofratingsineachcategory

30.3

34.2

18.4

10.5

0.0

6.6

100.0

16.67

66.67

0.00

0.00

0.00

Proportionofcompaniestowhommaterialinvestmentbankingserviceswereofferedduringtheprevious12months

16.67 100.00

Analystdisclosures
None of the analysts involved in the preparation of this research report or a member of his/her household is an officer, director or supervisory board member of any of the
company(ies)thatis/arethesubjectofthisresearchreport.Noneoftheanalystsinvolvedinthepreparationofthisresearchreportormembersofhis/herhouseholdholdany
financialinterestinthesecuritiesofthecompany(ies)thatis/arethesubjectofthisresearchreport.Noneoftheanalystsinvolvedinthepreparationofthisresearchreporthave
receivedorpurchasedsharesofthesubjectcompanypriortothepublicofferingofthoseshares.

DisclosuresonpotentialconflictsofinterestforAvendusSecuritiesPrivateLimitedand/oritsassociatecompanies(Avendus)asonFebruary6,2013
Asontheabovementioneddate,theshareholdingsofAvendusdoesnotexceed5%ofthetotalissuedsharecapitalofMOILLimited(MOIL).Avendusdoesnotholdanyother
financialinterestinMOILthatissignificantwithregardtotheresearchrecommendation.Asontheabovementioneddate,theshareholdingsofMOILdoesnotexceed5%ofthe
totalissuedsharecapitalofAvendus.Avendusisnotamarketmakerorliquidityproviderinthesecuritiesoftherelevantissuerorinanyrelatedderivatives.Avendushasnotbeen
aleadmanagerorcoleadmanagerofapubliclydisclosedofferofsecuritiesofMOILorinanyrelatedderivativesoverthepast12months.Overthepast12months,Avendushas
notbeenpartytoanagreementwithMOILwithregardtotheprovisionofotherinvestmentbankingservicesthatdonotentailthedisclosureofanyconfidentialcommercial
information.Avendusisnotpartytoanagreementwiththesubjectcompany(ies)ofthisresearchreportwithregardtotheproductionofthisresearchreport.
Sharepricehistoryandratingchanges

305
MOIL(InitiatedonJul04,11)

Rating,Date,TP(INR)
Add,10Aug,297
Add,06Feb,288

280

Hold,28May,270
255
Reduce,07Feb,249
230

205
Feb12

Mar12

May12

Jul12

Sep12

Oct12

Dec12

Feb13

Mining

India Equity Research

MOIL

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Thiscommunicationisexemptfromthefinancialpromotionrestriction(inSection21oftheFinancialServicesAndMarketsAct,2000(FSMA))relatingtothecommunicationofan
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Mining