MOIL has a Net Worth of Rs 1860 crores and a NAV of around Rs 110/share.The Company will probably earn around Rs 700 crore this fiscal year after doing Rs 465 crores last year (which was a bad year for the industry).Operating Cash Flow has been generally higher than the Net Profit leading to improved cash position over the last 4 years.The Capital Requirements of the Business is quite low leading to high Return Metrics.If the Government sells the 20% stake at Rs 1500 crore that would give the company a market cap of Rs 7500 crore.Taking out the Rs 1700 crore in cash would make the company be valued at 3.2x BV and 8-9x P/E.This is a substantial discount to Global Mining Companies.


Like Coal India Limited,MOIL looks like a very safe commodity investment at a cheap valuation.With growing Indian Demand,MOIL can hardly miss continuing on a steady 10-15% earnings growth over the next 4-5 years.If the commodity prices flare up again like 2008 due to QE2,then MOIL provides a big upside as well.Its a good investment for investors looking to invest in safe mining plays.With government ownership,the typical Indian management risk is also greatly mitigated.

India has divested small equity stakes in a number of state owned Commodity Companies this year and the trend is expected to continue in the future as well.Metal Mining company NMDC and Oil/Gas Player OIL India were sold earlier this year and Coal India Limited (CIL),Hindustan Copper and MMTC are also in the pipeline.Besides Commodity […]

The Indian government is fast tracking the process of choosing Investment Bankers for its proposed Rs 40,000 crore($8.5 Billion) divestment of state owned companies in the current fiscal year ( March 2010-2011) which would beĀ  a 60% increase over last year. This comes in the wake of the big losses that investors of last year […]