>IPO ANALYSIS: Manganese Ore India Limited (MOIL)

Fairwealth Research Desk rates the Initial Public Issue (IPO) of Manganese Ore India Ltd - Subscribe. The issue will open on Nov. 26, 2010 and close on Dec. 01, 2010 for retail investors and on Nov 30, 2010 for Institutional Investors. The face value is Rs. 10 per share and the price

band for the issue is Rs 340-375. It is a 100% book building process aggregating over Rs 1230cr.

Manganese Ore India Ltd (MOIL), a Miniratna Public Sector undertaking, is the largest producers of manganese ore by volume in India. It operates with 10 mines across India, of which six mines are located in the Nagpur and Bhandara districts of Maharashtra and four in the Balaghat district of Madhya Pradesh. All these mines are about a century old. Except three, rest of the mines is worked through underground method.

The outlook for Manganese ore looks strong on the back of strong domestic demand from steel industry and huge investment pipeline of Indian infrastructure.

VALUATIONS

On the price band of Rs 340-375, company is available at P/E of 12.68x on the lower price band and 13.98x on the higher price band based on FY10 earnings. At the book value of Rs.99.84 the stock is priced at P/BV of 3.76x on the higher price band and 3.40x on the lower price band.

MOIL has a net worth of Rs 1860cr and NAV of Rs 110.71/share.

We expect the demand of manganese ore to cross 4mt by the first half of FY13. Long term investors can consider the IPO with an expected return of 50-60% with a time horizon of 12-24 months whereas short term investors can expect listing gains of 20-30%.

To see issue details: MOIL

RISH TRADER