PSU stock to buy: Nagpur-based manganese ore producer gets target price upgrade

Antique Stock Broking has upgraded the target price for MOIL Ltd, a leading manganese ore producer in India, to Rs 434, up from Rs 385. This revision reflects the Nagpur-based PSU's positive volume growth prospects and increased FY27 volume assumptions by 3.8 per cent, leading to an expected 5.6 per cent boost in FY27 Ebitda. The domestic brokerage maintained its 'Buy' rating on the stock and said the heightened target multiple from 6 times to 6.5 times FY27E EV/Ebitda further underscores its confidence in MOIL's continued growth trajectory.

Operational performance

MOIL's impressive operational performance in the recent months of April and May 2025 has been a key driver for this target price increase. The company reported record ore production levels of 162 KT and 171 KT, respectively, marking an 18 per cent year-on-year increase. Despite a volatile pricing environment, MOIL continues to show resilience, driven by its strategic focus on exploration activities.

The miniratna undertook significant exploratory drilling, achieving 11,453 meters in April and 13,352 meters in May, with year-on-year increases of 58 per cent and 17.5 per cent, respectively. This enhanced exploration capacity is part of MOIL's broader strategy to double its environmental clearance capacity from 2.5 mtpa to 5 mtpa by 2030.

Market conditions 

The international market for high-grade manganese ore has seen a downturn, with prices dropping by approximately 17 per cent from the fourth quarter of FY25. Nonetheless, MOIL benefits from an uptick in medium-grade ore prices, which have risen by about 5 per cent above previous levels. This pricing dynamic, coupled with increased domestic demand, particularly from the steel industry, supports the company's growth trajectory.

The domestic market has shown signs of strength, with manganese alloy production rising by 15 per cent year-on-year to 45 KT in April 2025. Additionally, exports of manganese alloys increased by 6 per cent to 17 KT, highlighting the company's robust positioning in both local and international markets. Despite recent price cuts in May and June 2025, which ranged from 5 per cent to 15 per cent, MOIL's long-term outlook remains positive, supported by anticipated domestic demand growth.

Strategic capital expenditures

MOIL's strategic capital expenditures, including high-speed shaft sinking projects, aim to bolster production capacities significantly. The completion of these projects is expected to increase the Gumgaon mine capacity from 150 ktpa to 350 ktpa and the Balaghat mine capacity from 300 ktpa to 800 ktpa, reinforcing MOIL's production capabilities.

Future demand and joint ventures

In alignment with the National Steel Policy's targets, India's manganese ore demand is projected to grow significantly, reaching approximately 11 mtpa by 2030 from the current levels of about 8 mtpa. MOIL's commitment to exploring joint ventures, such as the one with GMDC, is part of its strategy to meet these future demands, supported by a phased capital expenditure plan of INR 24 billion.

Despite the challenges in global manganese production, with key players like Eramet and Jupiter Mines reporting declines, MOIL's strategic planning and aggressive capacity expansion efforts position it favourably within the market. The anticipated ban on crude manganese ore exports from Gabon in 2029 could further aid price stability and enhance MOIL's market position.