MOIL Initiating Coverage 20151130

INITIATING COVERAGE
30 NOV 2015
MOIL
BUY
INDUSTRY
MINING
CMP (as on 27 Nov 2015)
Rs 199
Target Price
Rs 242
Nifty
7,943
Sensex
26,128
KEY STOCK DATA

Bloomberg
MOIL IN
No. of Shares (mn)
168
MCap (Rs bn) / ($ mn)
33/500
6m avg traded value (Rs mn)
15
STOCK PERFORMANCE (%)

52 Week high / low
Rs 325/183
3M
6M
12M
Absolute (%)
(4.6) (20.6)
(37.5)
Relative (%)
(4.2) (15.4)
(29.4)
SHAREHOLDING PATTERN (%)

Promoters
80.00
FIs & Local MFs
3.99
FIIs
6.48
Public & Others
9.53
Source : BSE
Ankur Kulshrestha
Ankur.kulshrestha@hdfcsec.com
+91-22-6171-7346
Anuj Shah
Anuj.shah@hdfcsec.com
+91-22-6171-7321
All that cash

Manganese (Mn) is a critical steel input, a key part
of the production process and a source of
important mechanical properties. It is mostly used
in the form of alloys Silicomanganese (~65%) and
Ferromanganese (~35%).
With China consuming ~60% of the global output
(in contained metal terms), the slowdown in its
economy has hit Mn ore prices, like other ferrous
inputs. Despite >50% of the capacity being below
cash cost at current prices (US$ 2.09/dmtu), it is
difficult to call a bottom for the Mn ore prices. India
imports >50% of its domestic requirements, as
domestic ores are of a lower grade.
Despite the slump, MOIL is attractively positioned
because (1) It is the only domestic producer of high
grade ores, (2) 1st quartile cash costs, (3) Long
reserve life (30+ years), and (4) Cash on balance
sheet (~Rs 170/sh). Initiate with a BUY with a TP of
Rs 242 (5.0x FY18x EV/EBITDA)
Key takeaways
Near-term outlook weak: With weak prices,
stagnant production/sales and large fixed costs

(employees formed 60% of the op cost in FY15),
the profitability is expected to decline sharply
(EBITDA margins at 25% in FY16E vs. 46% in
FY15). We expect the earnings to decline 42/12%
in FY16/17 mainly on account of weak pricing.
Compared to mining PSUs with high cash
content, we believe the possibilities of MOIL

taking up large, long gestation projects are low.
This is due to:
o Low capex intensity of core operations,
mainly mining
o Domestic overcapacity in ferro-alloys.
As a result, dividend yields (currently at ~4%),
may rise sharply. At current valuations (2.5-3.0x

1-year forward), the risk to reward is favourable.
Financial Summary
Y/E Dec (Rs. in mn)
Net Sales
EBITDA
PAT
Diluted EPS (Rs)
P/E (x)
EV / EBITDA (x)
RoE (%)
FY14
10,213
5,546
5,096
30.3
6.6
0.8
17.3
FY15
8,233
4,159
4,280
25.5
7.8
1.0
13.2
FY16E
6,572
1,684
2,475
14.7
13.5
2.1
7.2
FY17E
6,974
1,628
2,180
13.0
15.3
2.6
6.3
FY18E
8,168
2,424
2,628
15.6
12.7
1.7
7.4
Source: Company, HDFC sec Inst Research
HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters
MOIL : INITIATING COVERAGE
Manganese: A critical element in the steel value chain

Mn is a critical steel input, a
key element in the production
process and imparts
important mechanical
properties
Most Mn is used in the form

of Silicomanganese (~65%)
and Ferromanganese (~35%)
alloys
Mn is a critical steel input
Manganese Value Chain
Manganese is a critical raw material input and
Manganese Ore
additive for the steel industry owing to its deoxidating, sulphur fixing, and alloying properties.
Feedstock for Ferroalloys

93% - 94%
Its addition to steel enhances mechanical
properties as strength, hardness, toughness,

stiffness and wears resistance. Most Mn ore is
processed into alloys before being used to make
steel.
Ferro Alloys
~85%
Ferromanganese (FeMn), which accounts for

~30-35% of alloys, is mainly used in flat
products.
Some Mn ore is used directly to make iron
Slag
~15%
SiMn : ~65%
FeMn : 35%
Other
~10%
Crude Steel
~90%
Silicomanganese (SiMn), which accounts for
about 65-70% of all Mn alloys produced, is

mainly used in long products.
Speciality Processing
6% - 7%
Source: International Mn Institute (IMnI), Metal Bulletin,

HDFC Sec Inst Research
Global Mn Alloy Production Break-up
through BF route where it acts as a desulphuriser.
25
In 2013, the global consumption of Mn alloys
20
Ref FeMn
HC FeMn
mT
SiMn
Total
19.1
17.9
17.5
11.9
11.7
13.2
14.6
was ~19mT, with SiMn accounting for ~70% of

the volumes.
15
Mn is a consumable for steel industry as recovery
10
8.7
1.5
1.6
1.6
1.7
4.4
4.4
4.2
4.2
from scrap is not possible. It is not recyclable.
Other industrial applications include alloying in
non-ferrous metals, zinc smelting, dry cell

batteries and chemicals.
2010
2011
2012
2013
Source: International Mn Institute (IMnI), Metal Bulletin,
HDFC Sec Inst Research HC: High Carbon; Ref: Refined Fe Mn
Page | 2
1 tonne of steel requires ~8.8kg of Mn input

On an average, 8.8kgs of Mn
input is required for 1 tonne
of steel production
Given the break-up of global steel production, 1

tonne of steel would need 8.8kg of Mn
(contained metal)
Mn is consumed in high proportions in
making of stainless steels and high-strength

low-alloy steel (HSLA)
Given the ore quality, every

tonne of steel produced in
India needs ~35kg of Mn ore
input
Steel Types Relevant To Manganese
In Indias context, as stated by BIS standards:

10kg of Mn ore is required for 1 tonne of hot
metal (BF grade ore 25-30% Mn)
7kg of SiMn is consumed for a tonne of crude

steel on an average, which, in turn, needs 1.8
tonne of Mn ore (30-35% Mn)
5kg of FeMn is consumed for a tonne of
crude steel on an average, which, in turn,

needs 2.4 tonnes of Mn ore (>40% Mn)
For a steel production target of 180 mT in 2020,

Indian Bureau of Mines (IBM) estimated
domestic Mn ore requirement at 9 mT (~5%)
High Mn content steels

High Mn non-magnetic steel
Hadfield steel
Stainless (200-series)
Low Mn content steels
Carbon steel
HSLA steel
Engineering/construction steel
Stainless (excl. 200-series)
Mn consumption/tonne of
steel
% of steel
produced
Mn
content
1.0%
1.0%
0.4%
11%
13%
12%
87.0%
7.0%
3.0%
2.0%
0.5%
1.5%
1.0%
1.0%
0.9%
Source: International Mn Institute (IMnI), IBM, HDFC sec Inst

Research
Note: Totals may not add up due to rounding-off
Domestic Mn Ore Consumption Estimates (IBM)
Mn ore required for Hot Metal (1)

Silico Manganese (SiMn) (2)
- Mn Ore/t of Si Mn (3)
Ferro Manganese (FeMn) (4)
- Mn Ore/t of Fe Mn (5)
Total Mn ore Content (kg/T)
( 1+2*3+4*5)
Mn ore content
(kg/t)
10
7
1.8
5
2.4
34.6
Source: International Mn Institute (IMnI), IBM, HDFC sec Inst

Research
Page | 3
1.5
1.0
0.5
FY15
FY14
FY13
FY12
FY11
FY10
FY09
FY08
consumption of Mn ore in FY15, from practically

nil in FY05.
2.0
FY07
Imports have grown to ~60% of apparent
<35%
2.5
FY06
grade ores (Mn >35%), which are typically

blended with lower grade domestic ores before
alloy production.
35-40%
mT
Source: IBM, Ministry of Trade, HDFC sec Inst Research
Break-up Of India Mn Ore By Grade

FeMn Grade
Medium
5.3
mT
5.0
4.0 4.2
4.0
3.3
2.2
3.0
2.0
2.9
2.7
1.5
1.5 1.4 1.3 1.6
1.0
FY15
FY04
FY03
3.3
4.7 4.8
FY14
Resources: 288 mT
Net imports
FY13
33.3
Production
6.0
FY12
15.6
Fe Mn/BF
Mixed
Medium and
BF Fixed
Others
Imports Now At 60% Of Domestic Mn Consumption
FY11
35.1
BF Grade
FY10
15.2
FY09
13.9
FY08
Reserves: 142 mT
7.8
FY07
9.9
26
14.2
6.1
FY06
9.1
FY05
13.8
FY02
India needs to import >50% of

its Mn ore requirements,
mostly of higher grades
40-44%
3.0
FY05
As a result, imports are dominated by higher
44-46%
FY04
hardly 15-20% of domestic reserves compliant

with FeMn requirements.
3.5
FY03
Indias domestic ores are inferior in quality, with
46%+
FY02
Low on high grade
Imports Dominated By Higher Grade Ores
FY01
India imports >50% of its Mn ore requirement
FY01
Domestic reserves are of

inferior quality, with only
15-20% compliant with FeMn
requirement (Mn> 35%)
Page | 4
20,000
India
Ukraine
Russia
South Korea
Others
000 t
~40% of Mn Ores Produced Globally By China

China
Brazil
70,000
South Africa
India
Australia
Others
Gabon
000 t
60,000
16,000
50,000
12,000
40,000
30,000
8,000
20,000
4,000
10,000
2008
2009
2010
2011
2012
Chinese Ore Is Poor In Mn Content
China
Ukraine
Brazil
50%
40%
4,000
2009
2010
2011
2012
2013
India
South Africa
Ghana
Japan
Australia
Russia
Gabon
'000 T
24%
28%
38%
2,000
36%
43%
45%
20%
44%
41%
30%
10%
2008
It Also Dominates Seaborne Trade
18%
0
-2,000
Others
Ghana
Ukraine
India
Brazil
Gabon
Australia
South Africa
However, due to inferior

quality of its ores, it imports
heavily and dominates the
global seaborne trade in Mn
ore
China
China
China accounts for ~60% of

global Mn ore consumption
and ~40% of ore production
~60% Of Global Mn Consumption of Contained

Metal by China
-4,000
-6,000
2008
2009
2010
2011
2012
Source: IMnI, HDFC sec Inst Research
Page | 5
A commodity in the doldrums

Mn ore, iron ore and steel prices (Rebased)
Mn Ore (44% Mn), CIF Tianjin Port
Iron ore, Brazil to Europe, 64.5% Fe, FOB
Iron ore fines, 62% Fe, CIF China
China HRC Spot prices
1000
%
900
MOIL IPO
800
700
600
500
400
300
US$45/t
200
US$2.09/dmtu
US$286/t
100
Jan-03
Apr-03
Jul-03
Oct-03
Jan-04
Apr-04
Jul-04
Oct-04
Jan-05
Apr-05
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Source: Metal Bulletin, Bloomberg, HDFC sec Inst Research

Note: All data as of November 27, 2015, close. Iron ore annual contract prices prior till JFY10, Chinese spot price thereafter
Highly levered to Chinas steel consumption, Mn Ore pricing has crashed in lockstep with steel/iron ore
Page | 6
MOIL: World-class assets with long reserve life
Low, 1st quartile cash costs,

long reserve life and high
grade of reserves make MOIL
a leading Mn Ore producer
globally
Operating world-class assets
Global indicative mn ore cash cost curve (FOB 2014)
MOIL operates 10 mines in Maharashtra and MP.
6.00
It produces high-quality Mn ores (35%+ Mn

content), which are the key drivers for business.
It is the only producer of high-grade Mn ore

domestically.
The operations are 1st Quartile on Mn ore cash
cost curve. However, compared with other large

producers, which are export focused, MOIL sells
domestically.
Reserve life of ~30 years on last disclosed
reserves numbers. MOIL has continuously added

resources in the past to maintain reserve life.
Average grade of reserves is ~33%, with grade at
two largest mines, Balaghat and Dongri Buzurg,

in excess of 40%.
Current price (CIF China)
5.00
Cash cost (US$/dmtu)
MOIL is the sole producer of

high-grade Mn ore in the
domestic market
Swing producers
4.00
MOIL
3.00
2.00
1.00
0.0
7.0
14.0
21.0
28.0
35.0
42.0
Production (mT)
Source: Companies, IBM, HDFC sec Inst Research

Note: Production/cost from swing producers is representative and
not accurate due to restricted data availability
Reserves And Resources

State
Balaghat (MP) and Dongri

Buzurg (Maharashtra) are
two key mines that are a
source of high-grade Mn
Balaghat
Dongri Buzurg
Other MP Mines
Other Maha mines
Total (JORC Compliant)
FY14 (UNFC Compliant)
Latest (UNFC
Compliant)
Avg Mn
Grade (%)
40%
42%
37%
35%
33%
Reserves
Proved Probable
6.92
2.07
2.98
1.51
2.26
2.83
1.79
15.62
6.12
Total Measured Indicated

8.99
12.71
7.14
2.98
3.31
7.48
3.76
5.58
1.62
4.63
5.44
8.29
21.75
36.78
24.53
32.34
Resources
M+I
19.84
10.79
7.21
13.73
61.30
Inferred
1.49
0.23
3.71
2.81
8.24
Total
21.33
11.01
10.92
16.54
69.54
73.50
77.38
Source: Company, IBM, HDFC Sec Inst Research Note: JORC compliant reserves as at October 30, 2010
Page | 7
MOIL accounts for a majority of Indias production/high-grade reserves

MOIL accounts for a lions
share in domestic Mn ore
production and consumption,
apart from being the only
producer of high-grade Mn
ores
MOILs Share Of Consumption In India

India
6,000
MOIL
MOILs Share Of Production In India
% of domestic cons (RHS)
'000t
India
30%
3,500
5,000
25%
3,000
4,000
20%
3,000
15%
2,000
10%
1,000
5%
0%
MOIL
% of Dom. Prodn (RHS)
'000t
60%
50%
2,500
40%
2,000
FY11
FY12
FY13
FY14
30%
1,500
20%
1,000
10%
500
0
0%
FY11
FY15
Source: Company, IBM, HDFC sec Inst Research
FY12
FY13
FY14
FY15
Source: Company, IBM, HDFC sec Inst Research
Domestic Ore Producers

Producers
MOIL Limited
Tata Steel Limited
The Odisha Manganese and Minerals (P)
Limited
M.L. Rungta
RBSSD & FN DAS
The Sandur Manganese & Iron Ores
Limited
Gujarat Mineral Development
Corporation
Others
Source: IBM, HDFC sec Inst Research
District
State
Grade of ore
Maharashtra
HG+MG
Odisha
MG
Sundergarh
Odisha
MG
Keonjhar
Vizianagaram
Odisha
Andhra Pradesh
MG
MG+LG
Bellary
Karnataka
MG+LG
Panchmahal
Gujarat
MG
Bhandara
Nagpur
Keonjhar
Sundergarh
Goa, Jharkhand, Rajasthan
MG+LG
Page | 8
MOIL: In the numbers
0.80
0.60
1.00
4.0
0.80
3.0
0.60
Payroll, Royalties (DMF) To Drive Cash Costs Higher

Implied cash cost/t
7.0
0.0
Mn Ore Accounts For >90% Of Sales
US$/dmtu
Manganese ore
E.M.D.
Ferro manganese
Ferro manganese slag
Power to MPEDCL(KwH)
100%
5.0
80%
4.7
3.0
60%
3.80
1.88
2.41
2.0
1.0
1.0
Blended EBITDA/T
6.0
4.0
2.0
FY09
FY18E
FY17E
FY09
FY16E
FY15
0.00
FY14
0.20
FY13
0.20
FY12
0.40
FY11
0.40
Profitability will be further

impacted by higher payroll
costs and additional royalties
under DMF
5.0
FY18E
1.00
1.20
FY17E
1.40
FY16E
1.20
6.0
FY15
1.60
FY14
Rs bn
US$/dmtu
FY13
mT
7.0
FY12
Capex (Rs bn, RHS)
FY11
1.40
Sales
Realisations Fall In Line With Declining Global Prices
FY10
Production
FY10
1.7
1.51 1.65 1.53
0.55 0.49
0.75
1.97 1.81 1.63 1.73 1.74 1.78 1.90

1.40 1.67
40%
20%
FY18E
FY17E
FY16E
FY15
FY14
FY13
FY12
FY09
0%
FY11
Mn prices are expected to

remain under pressure given
global glut
Volumes Stagnant, We Expect Capex To Increase
FY10
We do not expect steep

volume upsides, capex largely
treadmill in nature
FY09
FY10
FY11
FY12
FY13
FY14
FY15

Note: US$/dmtu calculated at average content of 44% Mn
Page | 9
Lower Return Ratios (vs. Historical Averages)

RoIC (%)
%
12.0
120.0
Average
SD-1
(x)
10.0
100.0
8.0
80.0
6.0
60.0
4.0
40.0
2.0
20.0
FY18E
FY17E
FY16E
FY15
FY14
FY13
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
0.0
P/E
P/B
P/E (x)
SD+1
Average
SD-1
(x)
3.5
P/B (x)
SD+1
Average
SD-1
(x)
3.0
2.5
2.0
1.5
1.0
0.5
-
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
-
EV/EBITDA (x)
SD+1
RoE (%)
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Lower profitability to drag

down the return ratios and
valuations to historical lows
140.0
Low Implied Multiples Impart Safety Against Price Drop
Page | 10
MOIL Ltd: Can it escape Make in India?

MOIL
GMDC
NALCO
NMDC
33.4
27.5
102.2
367.8
Market Cap (Rs bn)

12.0%
Cash
Cash
EV
EV
Cash
Cash
EV
EV
37.8%
Cash (as % of market

cap)
45.4%
47.1%
52.9%
54.6%
62.2%
88.0%
Commodity exposure
Ministry
Forward integration
Other diversification
plans/Capital
misallocation options
Manganese
Lignite, Bauxite, Manganese,

Flourspar
Mandate for all minerals in Gujarat
Aluminum, Alumina
Iron Ore, Diamonds, Potash
Mines
Govt of Gujarat
Mines
Steel
Small FeMn capacity

operational (10,000 TPA)
Excess domestic capacity in Mn
alloys limits downstream capex
likelihood Focus to remain on
increasing Mn ore production
Power plant of 2*125 MW is

currently operational
May acquire Mn ore mines

overseas
Wind/solar capacity
Several MoUs for cement,

alumina, Mn Alloys in place
Wind/solar
Present across Al value chain.

Also, currently on the drawing
board:
Alumina refinery (1 mTPA)
Alumina refinery in Gujarat (1
mTPA)
Overseas smelters
Nuclear Power plant with NPCIL
114 MW of wind capacity
Pellet plant operational

Putting up a steel plant for
Rs 155bn
2 steel plants on the anvil
(Karnataka and Jharkhand)
Has been scouting for

Potash assets globally
Stake in Legacy Iron ore,
Australia
Page | 11
Valuations remain
inexpensive compared with
global peers and domestic
miners. Despite the macro
headwinds, we believe the
risk reward is favourable,
given the large cash on B/S
Peer valuation
Company
MCap
(US$bn)
EV
(US$bn)
EV/EBITDA (x)
FY16E
FY17E
P/E (x)
FY16E
FY17E
Mn Pureplay
South 32*
Eramet*
African Rainbow Minerals*
Domestic miners
Coal India (BUY)
NMDC (SELL)
GMDC*
4.7
1.1
0.9
6.1
2.1
1.2
3.9
12.9
6.9
3.3
4.4
4.9
15.6
N/M
20.3
10.3
N/M
10.1
32.6
5.6
0.4
24.5
2.6
0.2
8.3
5.9
6.6
8.4
6.3
5.3
13.2
11.0
9.1
13.1
11.1
7.9
MOIL*
0.5
0.1
2.1
2.7
13.5
15.3
Source: Companies, Bloomberg, HDFC Sec Inst Research, * Not rated

Market data as of November 27, 2015 close, South32 and African Rainbow Minerals are June YE, Eramet is December YE
Key Assumptions
FY13
FY14
FY15
FY16E
FY17E
FY18E
54.36
1.19
5.10
3.12
1.51
1.81
60.36
1.13
5.29
3.14
1.65
1.63
61.16
0.91
4.22
3.06
1.53
1.73
65.00
0.98
2.75
2.09
0.55
1.74
66.00
1.03
2.75
2.09
0.49
1.78
66.00
1.03
3.25
2.47
0.75
1.90

Note: All prices/costs normalized to benchmark Mn ore content (44%)
Key Sensitivities
Benchmark
Mn ore
prices
(US$/dmtu)
We model a modest recovery

in the global Mn ore prices
(currently at US$2.09/dmtu)
Key Assumptions
US$/dmtu unless otherwise specified
INR:US$
Mn Ore volumes (mn T)
Benchmark Mn ore prices
MOIL Realisations
Blended EBITDA
Implied cash cost (C1)
TP (Rs)
2.75
3.00
3.25
3.50
3.75
62
199
214
229
244
259
INR:US$
64
204
220
235
251
266
66
210
226
242
258
274
68
215
231
248
264
281
70
220
237
254
271
288
Page | 12
Production Break-up
2.27
3.17
4QFY15
2.76
3.11
3QFY15
2.38
2QFY15
Total
2.73
3.40
4QFY14
2.08
2.42
3.00
3.11
2.00
2.00
2.55
2.38
2.15
3.28
2.91
2.57
2.58
3.00
4.00
3QFY14
5.00
Fines
2.32
5.00
2.52
6.00
3.37
6.00
4QFY13
7.00
3.57
7.00
4.00
Non-fines
8.00
1QFY15
mT
Total
Fines
3.15
Non-fines
3QFY13
mT
8.00
2.83
2.00
1.00
1.00
Falling Realisations and EBITDA
Rs/t
Non-fines
12,000
Rs/t
Fines
12,000
10,000
10,000
8,000
8,000
6,000
6,000
Blended realisation/t
2QFY16
Realisations
2QFY16
1QFY16
1QFY16
2QFY14
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
1QFY14
0.00
0.00
EBITDA/t
4,000
4,000
2,000
2,000
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
3QFY14
2QFY14
1QFY14
4QFY13
3QFY13
2HFY16
2QFY16
1QFY16
4QFY15
3QFY15
2QFY15
1QFY15
4QFY14
2QFY13
3QFY14
Realisations/profitability is
expected to decline as MOIL
cuts prices sharply in
November
Sales Break-up
3QFY13
Global prices and demand

have put pressure on both
realisations and volumes for
MOIL
Page | 13
Income Statement
Year ending March (Rs mn)
Net sales
Growth %
Manufacturing expenses
Employee Expenses
SG&A Expenses
Other operating expenses
Operating profits
Operating Profit Margin (%)
Other operating income
EBITDA
EBITDA %
EBITDA Growth %
Other Income
Depreciation
EBIT
Interest
PBT
Tax
PAT
APAT
APAT Growth (%)
EPS
EPS Growth (%)
Balance Sheet
FY14
10,213
5.6
2,205
2,561
316
119
5,012
49.1
535
5,546
54.3
25.9
2,499
352
7,693
0
7,693
2,598
5,096
5,096
18.0
30.33
18.0
FY15
8,233
(19.4)
1,369
2,628
369
76
3,790
46.0
368
4,159
50.5
(25.0)
2,798
451
6,506
0
6,506
2,226
4,280
4,280
(16.0)
25.48
(16.0)
FY16E
6,572
(20.2)
1,598
2,975
380
66
1,553
23.6
130
1,684
25.6
(59.5)
2,573
507
3,750
0
3,750
1,275
2,475
2,475
(42.2)
14.73
(42.2)
FY17E
6,974
6.1
1,739
3,273
399
73
1,491
21.4
137
1,628
23.3
(3.3)
2,280
604
3,303
0
3,303
1,123
2,180
2,180
(11.9)
12.98
(11.9)
FY18E
8,168
17.1
1,926
3,463
419
80
2,280
27.9
144
2,424
29.7
48.9
2,260
702
3,982
0
3,982
1,354
2,628
2,628
20.5
15.64
20.5
FY14
FY15
FY16E
FY17E
FY18E
Share Capital
Reserves
1,680
29,593
1,680
32,137
1,680
32,929
1,680
33,429
1,680
34,376
Total Shareholders Funds

Deferred Taxes
Long-term Provisions & Others
31,273
(165)
1,174
33,817
110
103
34,609
110
103
35,109
110
103
36,056
110
103
TOTAL SOURCES OF FUNDS
32,282
34,030
34,822
35,322
36,269
Net Block + CWIP

CWIP
2,323
690
2,939
529
3,732
526
4,428
526
5,026
526
Investments, LT Loans & Advs

Inventories
Debtors
673
491
1,198
840
1,442
1,150
840
869
1,150
840
1,419
1,150
840
1,519
1,150
Cash & Equivalents
29,020
29,362
29,936
29,190
29,439
ST Loans & Advances, Others

Total Current Assets
Creditors
Other Current Liabilities &
Provns
Total Current Liabilities
158
30,867
70
217
32,171
35
217
32,172
35
217
31,976
35
217
32,325
35
2,201
2,415
2,415
2,415
2,415
2,270
2,450
2,450
2,450
2,450
Net Current Assets
28,596
29,722
29,723
29,526
29,875
TOTAL APPLICATION OF FUNDS
32,282
34,030
34,820
35,320
36,267
SOURCES OF FUNDS
APPLICATION OF FUNDS
Page | 14
Cash Flow
Reported PAT
Non-operating & EO items
PAT from Operations
Interest expenses
Depreciation
Working Capital Change
OPERATING CASH FLOW ( a )
Capex
Free cash flow (FCF)
Investments
INVESTING CASH FLOW ( b )
Share capital Issuance
Debt Issuance
Interest expenses
Dividend
FINANCING CASH FLOW ( c )
NET CASH FLOW (a+b+c)
Non-operating and EO items
Closing Cash & Equivalents
Key Ratios
FY14
5,096
1,651
3,444
0
352
2,099
5,895
(720)
5,175
0
(720)
0
(259)
0
(1,479)
(1,738)
3,437
1,651
29,031
FY15
4,280
1,964
2,316
0
451
(1,284)
1,483
(1,344)
139
0
(1,344)
0
(320)
0
(1,714)
(2,034)
(1,895)
1,964
29,089
FY16E
2,475
1,698
777
0
507
573
1,857
(1,300)
557
0
(1,300)
0
0
0
(1,681)
(1,681)
(1,124)
1,698
29,936
FY17E
2,180
1,505
675
0
604
(550)
730
(1,300)
(570)
0
(1,300)
0
0
0
(1,681)
(1,681)
(2,251)
1,505
29,190
FY18E
2,628
1,492
1,136
0
702
(100)
1,738
(1,300)
438
0
(1,300)
0
0
0
(1,681)
(1,681)
(1,242)
1,492
29,439
PROFITABILITY (%)
EBITDA Margin
APAT Margin
RoE
RoIC
RoCE
EFFICIENCY
Tax Rate (%)
Asset Turnover (x)
Inventory (days)
Debtors (days)
Payables (days)
Cash Conversion Cycle (days)
Debt/EBITDA (x)
Net D/E
Interest Coverage
PER SHARE DATA
EPS (Rs/sh)
CEPS (Rs/sh)
DPS (Rs/sh)
BV (Rs/sh)
VALUATION
P/E
P/BV
EV/EBITDA
OCF/EV (%)
FCF/EV (%)
FCFE/Market Cap (%)
Dividend Yield (%)
FY14
FY15
FY16E
FY17E
FY18E
54.3
49.9
17.3
115.1
17.3
50.5
52.0
13.2
77.6
14.0
25.6
37.7
7.2
17.0
7.2
23.3
31.3
6.3
12.8
6.3
29.7
32.2
7.4
18.1
7.4
33.9
1.6
18
72
6
84
N/M
N/M
N/M
29.8
1.3
43
49
2
89
N/M
N/M
N/M
34.0
0.9
64
60
2
122
N/M
N/M
N/M
34.0
0.9
60
56
2
114
N/M
N/M
N/M
34.0
0.9
66
48
2
112
N/M
N/M
N/M
30.3
32.4
7.5
186.2
25.5
28.2
8.5
201.3
14.7
17.7
8.5
206.0
13.0
16.6
8.5
209.0
15.6
19.8
8.5
214.6
6.6
1.1
0.8
135.1
118.6
20.4
3.8
7.8
1.0
1.0
36.9
3.5
6.3
4.3
13.5
1.0
2.1
53.9
16.2
6.8
4.3
15.3
1.0
2.6
17.4
(13.6)
2.8
4.3
12.7
0.9
1.7
44.1
11.1
5.8
4.3
Page | 15
RECOMMENDATION HISTORY
MOIL
Date
30-Nov-15
TP
330
310
290
270
250
230
210
190
170
CMP
199
Reco
BUY
Target
242
Rating Definitions
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
BUY
: Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL
: Where the stock is expected to deliver less than (-)10% returns over the next 12 month period
Page | 16
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Page | 17

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INITIATING COVERAGE

CMP (as on 27 Nov 2015)

KEY STOCK DATA

No. of Shares (mn)

MCap (Rs bn) / ($ mn)

6m avg traded value (Rs mn)

STOCK PERFORMANCE (%)

SHAREHOLDING PATTERN (%)

FIs & Local MFs

Public & Others

All that cash

Near-term outlook weak: With weak prices,

stagnant production/sales and large fixed costs

Compared to mining PSUs with high cash

content, we believe the possibilities of MOIL

As a result, dividend yields (currently at ~4%),

may rise sharply. At current valuations (2.5-3.0x

Source: Company, HDFC sec Inst Research

MOIL : INITIATING COVERAGE

Manganese: A critical element in the steel value chain

Most Mn is used in the form

Mn is a critical steel input

Manganese Value Chain

Manganese is a critical raw material input and

Feedstock for Ferroalloys

Its addition to steel enhances mechanical

properties as strength, hardness, toughness,

Ferromanganese (FeMn), which accounts for

Some Mn ore is used directly to make iron

Silicomanganese (SiMn), which accounts for

about 65-70% of all Mn alloys produced, is

Source: International Mn Institute (IMnI), Metal Bulletin,

Global Mn Alloy Production Break-up

through BF route where it acts as a desulphuriser.

In 2013, the global consumption of Mn alloys

was ~19mT, with SiMn accounting for ~70% of

Mn is a consumable for steel industry as recovery

from scrap is not possible. It is not recyclable.

Other industrial applications include alloying in

non-ferrous metals, zinc smelting, dry cell

MOIL : INITIATING COVERAGE

1 tonne of steel requires ~8.8kg of Mn input

Given the break-up of global steel production, 1

Mn is consumed in high proportions in

making of stainless steels and high-strength

Given the ore quality, every

Steel Types Relevant To Manganese

In Indias context, as stated by BIS standards:

7kg of SiMn is consumed for a tonne of crude

5kg of FeMn is consumed for a tonne of

crude steel on an average, which, in turn,

For a steel production target of 180 mT in 2020,

High Mn content steels

Source: International Mn Institute (IMnI), IBM, HDFC sec Inst

Domestic Mn Ore Consumption Estimates (IBM)

Mn ore required for Hot Metal (1)

Source: International Mn Institute (IMnI), IBM, HDFC sec Inst

MOIL : INITIATING COVERAGE

consumption of Mn ore in FY15, from practically

Imports have grown to ~60% of apparent

grade ores (Mn >35%), which are typically

Source: IBM, Ministry of Trade, HDFC sec Inst Research

Break-up Of India Mn Ore By Grade

1.5 1.4 1.3 1.6