Consider that in FY15 their EBIDTA was Rs.334 crores. Their ‘Other Income’ from interest on cash/bank of Rs.2793 crores (probably) was Rs.292 crores and their total profit before tax was Rs.651 crores.
http://www.bseindia.com/xml-data/corpfiling/AttachHis/E40A00E4_31A2_4DA3_BA1C_694A525AA1AF_150929.pdf
Now, look at their market cap, which is Rs.4200 crores. Reduce their cash and near cash holdings from it of Rs.3000 crores.
So, here’s a company that generates Rs.651 crores pre-tax profit in a year available for Rs.1200 crores. The ‘headwind’ you are referring to is the sliding price of manganese ore. MOIL operates 10 manganese ore mines all over the country. If this is their financial performance in these challenging circumstances, I only wonder how it will be when the scenario improves for them! How long will it take? If steel prices in our country firm up, manganese ore prices may also improve.
A week back, our government imposed anti-dumping duty on some steel from China.
Read this report:
http://www.careratings.com/upload/Research/IndustryResearch/Manganese%20Ore.pdf
Quoting it:
Approximately 90 percent of the overall manganese consumption is primarily attributed to the
steel plants globally; hence production of steel is the basic underlying for the demand of
the metal and its ore.
The growth in the production of manganese ore in India is highly correlated to the growth in the production of steel. The production of manganese ore has grown steadily from FY01 with the exception of FY06 and FY10. The consumption of manganese ore has increased at a faster pace when compared with its production in the backdrop of India’s ever increasing steel production.
Quote ends.
Look at the shareholding pattern of MOIL. Domestic institutions and FIIs are gradually raising their stake, in almost every quarter.
EPFO is taking guidance from LIC to invest 5% of their corpus. PSUs like MOIL will attract investor interest, in my opinion.
http://www.bseindia.com/stock-share-price/stockreach_shp.aspx?scripcode=533286
http://economictimes.indiatimes.com/markets/stocks/news/epfo-taps-lic-to-understand-stock-market-investments/articleshow/47572615.cms
Rs.356 was a high price five years back. Rs.245 looks cheap now, really cheap! The company gives Rs.8.50 as dividend. So, That’s a 3.5% further tax free yield.
Disclosure: This is not a recommendation to buy. I own this stock.