MOIL LIMITED has come with public offering of 33,600,000 equity shares of face value of Rs.10 each (the “equity shares”) at a price band of Rs.340 to Rs.375.Credit Analysis and Research Limited ("CARE"), has assigned a "CARE IPO Grade 5" to the proposed Issue, indicating above average fundamentals.
BID / ISSUE OPENS ON: NOVEMBER 26, 2010
BID / ISSUE CLOSES ON: DECEMBER 1, 2010
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Manganese is the fourth most used metal after iron, aluminium and copper. Over 90% of the world’s Production of manganese is utilized in the desulphurization and strengthening of steel. The manganese ore and alloy industry has historically derived demand from the steel industry and hence is directly exposed to the volatility and the cyclicality of the global steel industry. Manganese ore is smelted to produce manganese ferroalloys (such as ferromanganese and silicon manganese), which are used in steel-alloying applications. The performance of the manganese alloy industry is the key determinant of the manganese ore demand.
Many steel-making countries do not possess manganese ore resources. In CY2009, land-based total manganese reserves in the world are placed at 5,200 million tonnes, of which South Africa alone accounted for more than 75%, followed by the Ukraine (10%), Australia and India (3%) each and China and Brazil accounted for about 2% and 1% respectively.
As of March 31, 2005, total resources of manganese ore in India are placed at 378.6 million tonnes. State-wise, Orissa tops the total resources list with 40% share followed by Karnataka 22%, Madhya Pradesh 16%, Maharashtra 8%, Goa 5% and Andhra Pradesh 4%. Rajasthan, Gujarat, Jharkhand and West Bengal together shared about 5% of the total resources. (Source: Indian Bureau of Mines (IBM)).
World demand for manganese depends directly on the outlook of the steel industry. During CY01 to CY09, global steel capacities have grown at a CAGR of about 6.5% reaching to 1,750 million tonnes.
It is the largest producer of manganese ore by volume in India in Fiscal 2008 (Source: Indian Bureau of Mines, Indian Mineral Yearbook 2008). Its production of manganese ore increased from 864,890 tonnes in Fiscal 2006 to 1,093,363 tonnes in Fiscal 2010. It was conferred the Mini Ratna status in 2008, which provides them with certain operational and financial autonomy.
• Largest producer of manganese ore in India with access to significant reserves
• Well positioned to capture the growth potential of the Indian steel industry
• Track record of growth and efficient operations
• Strategic location of mines provides it with competitive advantages
• Strong track record of financial performance
• Strong capabilities for exploration, mine planning and research development
• Experienced senior management and large pools of skilled manpower
1. Largest producer of manganese ore in India with access to significant reserves
2. Well positioned to capture the growth potential of the Indian Steel Industry
3. Track record of growth and efficient operations
4. Strategic location of mines provides competitive advantages
5. Strong track record of financial performance
6. Strong capabilities for exploration, mine planning and research development
7. Experienced senior management and large pools of skilled manpower
Earning Per Share (EPS)
Return on Net Worth as per our Restated Standalone Financial Statements:
The company has Cash and bank balances of Rs.17,628.76 millions as on 30-09-2010, which comes to around Rs.104.93 per share, also it is a debt free company.
The share is valued at P/E of 13.53 (FY 2010) or 9.50 (FY 2011*) at upper band which very attractive.
The target price of the stock is Rs.493 for FY 2011 at P/E 12.5 for expected EPS of Rs.39.46.
Strong fundamentals, assured cash flows and very strong balance sheet along with 5% discount to retail investors makes it a strong buy, investors are therefore advised to apply at cut off price.