Sesa Goa – Motilal Oswal Securities Stock Tips
by admin on September 28, 2009
Sesa Goa
Reco price: Rs 276
Current market price: Rs 256.8
Target price: Rs 325
Upside: 26.6%
Brokerage: Motilal Oswal Securities
Sesa Goa’s promoters have increased their stake in the company by 2.11 per cent to 57.12 per cent through open market purchases. Earlier in the year, the promoters had hiked their stake a little before the acquisition of Dempo. Sesa continues to look for opportunities of inorganic growth in Goa.
Iron ore prices have started strengthening. The imports of iron ore by China are expected to pick up in the coming months because Chinese mills will have to start re-stocking for winter months. Iron ore prices have also bottomed once again.
Exports from India have suffered in recent months due to prolonged monsoon and procedural hiccups post change of royalty to ad-valorem rate of 10 per cent. A strong demand-driven iron ore prices in China augur well for Indian iron ore exporters like Sesa Goa. Weaker freights due to commissioning of new cape-size bulk carrier would result in higher realisations for exporters.
The brokerage has raised its price assumption from $55 per tonne free-on-board at Indian ports for 63 per cent Fe grade iron ore to $65 per tonne. As a result, the EPS estimates for 2009-10 and 2010-11 has been raised to Rs 21.1 (earlier Rs 17.9) and Rs 27.7 (earlier Rs 20.2). The stock trades at 10 times 2010-11 estimated EPS and an EV of 5.3 times 2010-11 estimated EBITDA. Maintain buy.
Sesa Goa
Reco price: Rs 276
Current market price: Rs 256.8
Target price: Rs 325
Upside: 26.6%
Brokerage: Motilal Oswal Securities
Sesa Goa’s promoters have increased their stake in the company by 2.11 per cent to 57.12 per cent through open market purchases. Earlier in the year, the promoters had hiked their stake a little before the acquisition of Dempo. Sesa continues to look for opportunities of inorganic growth in Goa.
Iron ore prices have started strengthening. The imports of iron ore by China are expected to pick up in the coming months because Chinese mills will have to start re-stocking for winter months. Iron ore prices have also bottomed once again.
Exports from India have suffered in recent months due to prolonged monsoon and procedural hiccups post change of royalty to ad-valorem rate of 10 per cent. A strong demand-driven iron ore prices in China augur well for Indian iron ore exporters like Sesa Goa. Weaker freights due to commissioning of new cape-size bulk carrier would result in higher realisations for exporters.
The brokerage has raised its price assumption from $55 per tonne free-on-board at Indian ports for 63 per cent Fe grade iron ore to $65 per tonne. As a result, the EPS estimates for 2009-10 and 2010-11 has been raised to Rs 21.1 (earlier Rs 17.9) and Rs 27.7 (earlier Rs 20.2). The stock trades at 10 times 2010-11 estimated EPS and an EV of 5.3 times 2010-11 estimated EBITDA. Maintain buy.
Related posts:
- SESA GOA – Analyst’s Corner
- Sesa Goa – Multibagger
- Angel Broking neutral on Sesa Goa
- Accumulate Sesa Goa, target of Rs 131: ULJK Securities
- GMR Infrastructure – Motilal Oswal Securities Stock Tips
Tagged as:
Motilal Oswal Securities Stock Tips,
SESA GOA,
Stock Investing,
stock investment,
Stock Market Advice,
Stock Market Research