Sesa Goa – A Mining & Manufacturing Company with Potential

UPDATE

Update as on 04.01.12: The government of India has raised export duty on iron ore to 30%. Share price of Sesa Goa has come down. Wait for the price to drop further and then start accumulating. Best wishes.

Sesa Goa - Latest Results

(in Cr.)
Sep-11
Jun-11
FY10-11
Revenue
756.66
1,698.35
7,510.46
Net Profit
-11.79
672.98
3,432.80
EPS
-0.14
7.74
39.98
Cash EPS
0.09
8
40.45
OPM %
7.05
61.66
59.99
NPM %
-1.56
39.63
45.71
 
 
 
 
Sesa Goa - Latest Results

Sesa Goa - Share price movement

 
 
 
Weekly H/L
166.6
153.5
Monthly H/L
196
148.7
52 Weeks H/L
346
148.7
 
( 6 Jan 11 )
( 20 Dec 11 )
Delivery / Var+ELM %
18.55
16.08
 
 
 
Sesa Goa - Share price movement

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Sesa Goa – A Mining & Manufacturing Company with Potential

Sesa Goa – A Mining & Manufacturing Company with Potential
Sesa Goa – A Mining & Manufacturing Company with Potential | Source

Sesa Goa – A Mining & Manufacturing Company with Potential


Poor results

Sesa Goa has produced poor result for the quarter ended 30.09.11 as compared to the quarter ended 30.06.11. Revenue has gone down, net profit slipped into negative and the company is struggling to make both ends meet. Sesa Goa has hiked its stake in Cairn India through a block deal. Through this deal, 1.5% of the equity has changed hands, which was worth Rs.936 crore. Sesa Goa is a Vedanta group company. Indian government has cleared Cairn Energy’s proposal to sell the majority stake of its Indian branch Cairn India to London-based mining company Vedanta Resources. Cairn Energy is a $6.5 billion company.

Cash rich company

The Environment & Forest Ministry has revoked the company’s mining clearance in 43 hectares in Northern Goa because of the deliberate concealing of facts by the company. Sesa Goa is also suffering from interest burden because of the high interest rates. The Supreme Court’s ban on mining in Karnataka has affected Sesa Goa also. When the company is struggling on the home turf, it has acquired a 51% stake in Liberia’s Western Cluster Deposits for Rs.400 crore. P.K. Mukherjee is the Managing Director of Sesa Goa. Sesa Goa is a cash rich company with reserves amounting to Rs.11500 crore. It is growing at a CAGR of 34.4%.

No company has been punished in India for any scandals

Sesa Goa’s gross revenue has taken a 15% hit because of its suspension of mining activities in Karnataka State following Supreme Court ruling. The capacity of the mine is 6 million tonnes per annum. Sesa Goa is confidant of commencing a new pig iron plant at any time now. The Corporate Affairs Ministry is examining the Serious Fraud Investigation Office’s report on the company. There are cases of over and under invoicing of exports and imports. What will happen to this report? As top politicians are all involved in all mining scandals, the report will go to the dust bin and nothing will happen to Sesa Goa. Investors need not worry about this report and can ignore it.

700 acres of land

Sesa Goa’s acquisition of Bellary Steel will add up the value chain for the company. The acquisition will fulfil the company’s dream of becoming a global iron-ore player. Sesa Goa’s bid Bellary Steel for Rs.220 crore outwitted JSW Steel’s bid of Rs.210 crore. The Supreme Court’s revoking the ban on iron ore exports from Karnataka will benefit Sesa Goa. Bellary Steel has land spread over 700 acres. Over the last two decades, the company diversified into the manufacture of metallurgical coke and pig iron. Sesa Goa paid a dividend of Rs.3.50 per share on the face value of Rs.1 per share for 2010-11.

Invest for medium term

The shares of Sesa Goa are traded in the Indian stock markets at Rs.155.65 (BSE 01.01.12). The volumes are high at around 18.8 million shares. The shares are available in both BSE and NSE. The company is engaged in the business of iron and steel along with intermediate products. The highest and lowest prices recorded by the shares of the company in the last one year are Rs.346 and Rs.148 respectively. The current share price is close to the lowest price in the last one year. One can buy the shares of Sesa Goa for medium term holding for decent gains. The net loss for Q2 may be ignored as soon the company has chance to post profit again.

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