MOIL good long term bet: Sharekhan

MUMBAI: Sharekhan is of the view that Manganese Ore India has a strong balance sheet and return ratios along with a stable dividend policy. The issue is a good long term bet, it says.

“The company has a strong balance sheet and return ratios along with a stable dividend policy (the company pays about 20% of its earnings).

At the issue price band of Rs 340-375, the stock is offered at 12.2x and 13.5x FY2010 earnings. On enterprise value (EV)/earnings before interest, tax, depreciation and amortisation (EBITDA) terms, the stock is offered at 7x and 8x its FY2010 EBITDA. The EV/ EBITDA multiple comes down further to 4.9x and 5.7x on TTM EBITDA basis.

Moreover, adjusting cash per share of Rs 104, the valuation looks more reasonable. We believe that on the back of the strong financials and being the largest player, MOIL is a good long term bet,” the report said.