MOIL Q3 Results Review - Sequentially Lower Earnings But Operating Leverage Help Sustain Margins: Systematix

Systematix Report

MOIL Ltd. reported Q3 FY24 net sales at Rs 3 billion plus 1.4%/-12% YoY/QoQ (2% above estimate). Adjusted Ebitda for the quarter was Rs 894 million plus 62%/-7% YoY/QoQ (10% below estimate). The sequential drop in earnings was primarily driven by lower Manganese ore prices during the quarter. The blended realisation at Rs 8,301/tonne was higher by 16% YoY but fell 8.3% QoQ; 5% below our estimate. Sales volumes increased +16% YoY to 0.34 million tonne but fell 4.7% QoQ.

Ebitda/tonne reported at Rs 2,600/tonne plus 40%/-2.6% YoY/QoQ was 10% below our estimate due to lower realisations. Segment revenue from power sales was reported at Rs 36 million, falling 17%/51% YoY/QoQ. MOIL registered the highest production of electrolytic manganese dioxide during nine months FY24, recording a growth of 30% YoY.

EMD is a 100% import substitution product, used mostly for pharmaceuticals and battery manufacturing. MOIL’s Q3 FY24 earnings were negatively impacted by lower realisations partially offset by higher volumes and lower cost of production.

The stock currently trades 7.3 times FY26 Ebitda, a significant premium to its long-term average of 5 times. We MOIL at 6 times FY26E Ebitda to arrive at a revised target price of Rs 304/share (Rs 302/share earlier). Downgrade to 'Hold'.

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