MOIL shares up 24% in 30 days, Antique sees more upside on PSU stock; here's target price

MOIL Ltd shares are up 24 per cent in the past one month and if one were to go by Antique Stock Broking, the stock has potential to rise further due to the PSU's healthy volume growth prospects.  The domestic brokerage maintained its 'Buy' rating on the MOIL stock, saying manganese ore demand in India is expected to grow 1.4 times the current level of 8 mtpa to 11 mtpa by 2030, in line with the 300 mt installed steel capacity target set under the National Steel Policy. 

MOIL is a miniratna state-owned manganese-ore mining company headquartered in Nagpur, India. Antique Stock Broking said the PSU is incurring high capex to enhance its production capacity. Despite the capex, MOIL's FY25 cash is expected to be 16 per cent of its market cap with a dividend yield of 1.8 per cent. "We like the volume growth prospects, maintain BUY rating with a target price of Rs 451 at a target multiple of 6 times FY27 EV/Ebitda," it said.

Antique Stock Broking said MOIL's Q2 realisation was impacted by three consecutive price cuts in manganese ore in the range of 8–27 per cent. The December quarter realisation would be supported by 3 per cent price hike across categories, except a 3 per cent price cut on high-grade ores, taken in December. The prices are expected to get stable over the medium term. Spot international high-grade manganese ore prices are higher YoY and are expected to be supported by supply tightness, the brokerage said.

MOIL's FY25 production target stands at 2.1 mt, which is 20 per cent higher YoY. The FY26 guidance is at 2.5 mt, which is 1.4 times the FY24 level of 1.8 mt. At the end of August, MOIL had the environmental clearance (EC) capacity of 2.5 mt, with the management targeting to raise it further to 3.4 mt by the end of FY25 and 5 mt by FY30.

Antique said international high-grade manganese ore prices had earlier witnessed a knee-jerk reaction and sharply rose to $9.5 per dmtu. Spot prices at 5.1 per dmtu have softened 46 per cent from peak but are still 2 per cent higher YoY amidst tightening of supply after cessation of operations at Australia’s GEMCO mine which typically accounts for 10–15 per cent of global manganese production. 

"This is expected to support prices in the medium term (the mine is expected to resume operation only by January-March 2025. Due to lower prices, Eramet has decided to suspend ore production at the Moanda mine for at least three weeks with an impact of 0.5 mt. Albeit, sales and shipments will continue during this period," it said.