Stock Outlook: MOIL a buy call?

by khalid on 15/10/2011 · 0 comments

MOIL India’s largest manganese producer has witnessed a 30% decline in its stock prices in the recent turmoil’s in the markets. The stock at these levels look lucrative and it is a time when investors can accumulate the stock. The valuations are lower than the levels it had been which suggests that the stock has corrected more than its actual valuation levels.

The growing domestic markets for steel, industry topping the profit margins, zero debt, and high cash a reserve has made MOIL a good bet to buy at the current levels. Currently the stock is trading at 8.2 times the trailing twelve month earnings which is at a discount to the public sector miners i.e. NMDC. Comparing as on EV/EBITDA basis, the company trades at 3.5 times, which is at a discount to the global mining peers.

The company had earlier cut the manganese prices by as much as 40% due to the global prices tumbling with the fear of excess supplies coming in. This was the reason for the company not performing well in the June quarters. However the demand for manganese has held up with the global steel producers the leading manganese users increasing their output by 8.4% over the last 8 months of this year.

 

Bell the Bull says: MOIL at the current valuations looks to be an attractive buy.

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