MOIL: Price hike helps company post growth in sales during Q1

MUMBAI: The price hike MOIL took during the April to June 2012 quarter has benefited the company; it posted growth in sales for the first time in six quarters. But despite increasing manganese prices, MOIL, the country's largest producer of the ore by volume, reported a drop in profit.

Though the company has raised prices again by 12-15% across different grades in the ongoing quarter, the positives appear to be priced in the stock for the time being. Compared with a 12% rise in the BSE Metal Index, MOIL has risen 17% year to date and is currently trading at a price to earnings multiple of 11.25 times.

Manganese prices have been on the rise since January 2012 after global major BHP Billiton raised prices. In addition to this, inventory surplus last year forced a number of global producers to cut production this year, which has also supported prices.

Manganese is a key steel making ingredient and is therefore susceptible to changing trends in the steel industry, which is currently witnessing very slow growth. For ever 1000 kgs of steel, about 30 kgs of manganese ore is required.

MOIL, which has a 40% market share in India reported a 16% rise in sales to Rs 242.57 crore. Its net profit declined 9% to Rs 99.41 crore.