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MOIL Ltd

| Q3 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤20th Mar 26

Summary : MOIL is aggressively expanding production and market share through mechanization and new projects, confident in strong demand despite global price volatility and project delays.

Management Perspective positive : Management consistently uses terms like 'significant strides,' 'excited to share,' 'strong shareholder value creation,' 'committed to produce,' and states there is 'no demand constraint' and 'huge market.' They express confidence in achieving future targets and improving performance.

Concall Report Analysis & Insights

Business Overview

  1. MOIL is India's largest manganese ore producer, contributing 50% of domestic production.
  2. The company operates 10 mines, with approximately 70% of production from underground.
  3. MOIL also produces Electrolytic Manganese Dioxide (EMD) and ferro manganese.
  4. Achieved highest ever production of 1.8 million tons and sales of 1.6 million tons in FY24-25.
  5. MOIL holds around 20% of India's manganese resources, meeting 50% of domestic demand.

Future Growth Prospects

  1. Targeting 3.5 million tons of manganese ore production by 2030, increasing market share to 32%.
  2. Focusing on higher exploration to add reserves and resources, and new shaft projects for underground mines.
  3. Planning to enhance Environmental Clearance (EC) limits to 5 million tons for unrestricted production.
  4. Investing INR664 crores in shaft sinking projects to improve infrastructure and achieve production targets.
  5. Exploring overseas market footprint and business expansion in other states through JVs and MoUs.

Management Insights

  1. MOIL has made significant strides in production, sales, environmental clearance, and capex over the past year.
  2. The company is excited to share its accomplishments, strategic initiatives, and future roadmap.
  3. MOIL believes in strong shareholder value creation, demonstrated by 161% average return on equity over 10 years.
  4. Management is committed to producing 3.5 million tons of manganese ore by 2030.
  5. There is no demand constraint for MOIL's products; the market is huge.

Signs of Skepticism

  1. Analyst questioned the disconnect between production and sales volumes in recent quarters.
  2. Analyst expressed skepticism about achieving government-set high production targets (e.g., 25 lakh tons for FY27).
  3. Analyst noted delays in Balaghat mine commissioning timeline compared to previous guidance.
  4. Analyst questioned if the stated production cost includes royalties and other mining costs.

Risk Factors

  1. Net Sales Realization (NSR) is not controlled by MOIL, dependent on steel demand and LME factors.
  2. Delay in high-speed shaft completion at Balaghat mine due to visa issues and COVID.
  3. Geopolitical developments and logistics issues can affect global manganese ore prices.
  4. Upcoming wage renegotiation for officers in 2027 and workers in 2027/2028 could impact costs.

Good To Know

  1. MOIL sources around 43% of its energy consumption from renewable energy.
  2. The Government of India holds a majority stake in MOIL.
  3. MOIL was appointed as the state trading enterprise for all manganese ore exports from India.
  4. The company has returned approximately INR3500 crores to investors over the last 9 years.
  5. MOIL is transitioning from semi-mechanized to fully mechanized mining methods.

Key Drivers

  1. Increased production capacity targets.
  2. Mechanization drives operational efficiency.
  3. Strong domestic demand for ore.
  4. Expansion into export markets.

Key Analyst Discussions

Competitive Environment

  1. Questions about import substitution opportunities for MOIL.
  2. Discussion on global manganese prices and inventory levels at Chinese ports.
  3. Inquiry about the demand environment in the Raipur region and its improvement.
  4. Questions on MOIL's ability to sell all production given market demand.
  5. Discussion on MOIL's market share and growth potential within India.

Market Trends & Consumer Behavior

  1. Questions regarding the reasons for recent increases in manganese ore prices.
  2. Discussion on the impact of logistics and supply disruptions on global prices.
  3. Inquiry about the demand for low-grade ore for blending purposes.
  4. Management confirmed strong demand in the Central region, exceeding MOIL's supply.
  5. Discussion on the volatility of manganese ore prices and MOIL's strategy to hold inventory.

Financial Highlights

  1. Questions on the disconnect between production and sales volumes.
  2. Inquiries about the mining cost per ton and its future roadmap.
  3. Discussion on the impact of wage renegotiation on employee costs.
  4. Clarification sought on the components included in the stated production cost.
  5. Questions regarding the timeline for achieving INR500 crores in profit.

Product Composition

  1. Questions on the breakup of high-grade versus low-grade production for future targets.
  2. Inquiry about the realization difference between high-grade and low-grade ore.
  3. Discussion on plans for beneficiation of low-grade products to enhance value.
  4. Management explained that lower grades are generated alongside higher grades.
  5. MOIL is exploring options to sell low-grade materials in the market or through MOUs.

Strategic Considerations

  1. Questions on the commissioning timeline for the Balaghat high-speed shaft.
  2. Inquiries about the capex plans for mechanization and modernization of mines.
  3. Discussion on the feasibility of achieving government-set production targets.
  4. Questions about the transition from opencast to underground mining methods.
  5. Clarification on the role of MDOs (Mine Development Operators) in MOIL's operations.
MOIL Ltd (MOIL) Concall Report Analysis & Insights | Dhanarthi