Manganese Ore India Limited

MOIL is a healthy PSU company, with decent management skills, clean balance sheet, lot of surplus cash to take on good acquisition opportunities. Yes, due to the commodity nature of business, there has been few bad quarters as Manganese prices have come down sharply, but in last 2 quarters, there're indications of prices bottoming out. Let's see how MOIL stock is valued:

1. We won't use PEG bargain method, since MOIL is a slow grower, and hence P/E ratio is not a very good indicator for MOIL.

2. Since its a stable, debt free business, Graham's hidden bond value method is a good indicator and the value comes at Rs 311

3. Using modified Graham's number (not just P/E, but also P/B), the value comes at Rs 321

4. Using DCF of average FCFF of Rs 23, the value comes at Rs 300 per share

With 30% margin of safety, the fair price comes at about Rs 220, which is incidentally also the all time low for the stock.

After making a big mistake of IPO investing in MOIL during 2010-2011 bull run, I started purchasing somewhat higher, again when I did not perform a lot of valuation analysis, and my average cost now is Rs 251 and MOIL constitutes 11% in my portfolio. Here're the investment actions over past 9 months:

I plan to hold this stock for long periods. At least I can say its a safe stock in my portfolio, and will sell it during market euphoria if it becomes too expensive compared to rational valuation.