Buy MOIL Ltd. target Rs 445 : HDFC Securities

HDFC Securities has a buy call on MOIL Ltd. with a target price of Rs 445 .The current market price of MOIL Ltd. is 335.2.
MOIL continued its strong delivery (EBITDA: Rs1.22bn, -11% QoQ, YoY Not comparable due to loss). Non-fines pricing was stronger QoQ (Rs 13,474/t 2.4x YoY, 29% YoY) and this could likely be due to a better mix. Volumes were lower than estimates (216kT, -43% YoY, -39% QoQ), as MOIL pricing was higher than imports for a considerable period in the quarter, before it could respond to sharp global pricing changes.
Due to transportation imbalances in South Africa, a key supplier, Mn ore prices should remain above US$5/dmtu. A key risk to this thesis is a decline in ferrous fundamentals (China Fe prices have declined around 38% from January peaks). Domestic demand is likely to remain stable due to strong protective cover around steel industry. The hike in dividend (Rs 11 per share in FY17, 3.3% yield, around 50% payout) should help address a key investor concern. We maintain our positive stance with a TP of Rs 445 (unchanged, 4.5x FY19 EV/EBITDA).