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SAIL
Added sinew
Tussles over Jharkhand’s Chiria iron-ore mines have come to a
much-awaited end, in favor of SAIL. With the Chiria deposits,
SAIL is now well placed for 100% iron-ore integration, even post
capacity expansion. Maintain Buy.
MoEF approves Chiria leases to SAIL. The Ministry of
Environment & Forest (MoEF) has granted forest clearance for
Ajitaburu, Budhaburu and Sukri-Latur leases of Chiria mines to
SAIL. This would help SAIL to remain 100% self-sufficient in
iron ore for several years, even after capacity expansion. This
further strengthens SAIL’s position as regards iron ore integration.
Chiria – One of the largest iron-ore deposits. Chiria mines in
Jharkhand have one of the largest iron ore deposits in the country,
with total reserves of ~1.8bn tons, of which SAIL has been
granted approval for ~1bn tons. Capacity at this deposit is likely
to be as much as 30-50mtpa and SAIL expects to fulfill 40% of its
requirement from the Chiria mines in the long term.
Development by FY15. Management has indicated capex of
`50bn on development of the Chiria mines. The mines are
expected to be commissioned by FY15; by then, SAIL’s capacity is
likely to have expanded to ~26mtpa from 13mtpa at present.
Valuation and risks. At current market price of `161, the stock
trades at FY12e PE of 9.1x and EV/EBITDA of 7.4x. We remain
positive on the stock, given SAIL’s huge capacity addition plans,
strong balance sheet and high level of backward integration in iron
ore. Maintain Buy with target price of `201
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
SAIL
Added sinew
Tussles over Jharkhand’s Chiria iron-ore mines have come to a
much-awaited end, in favor of SAIL. With the Chiria deposits,
SAIL is now well placed for 100% iron-ore integration, even post
capacity expansion. Maintain Buy.
MoEF approves Chiria leases to SAIL. The Ministry of
Environment & Forest (MoEF) has granted forest clearance for
Ajitaburu, Budhaburu and Sukri-Latur leases of Chiria mines to
SAIL. This would help SAIL to remain 100% self-sufficient in
iron ore for several years, even after capacity expansion. This
further strengthens SAIL’s position as regards iron ore integration.
Chiria – One of the largest iron-ore deposits. Chiria mines in
Jharkhand have one of the largest iron ore deposits in the country,
with total reserves of ~1.8bn tons, of which SAIL has been
granted approval for ~1bn tons. Capacity at this deposit is likely
to be as much as 30-50mtpa and SAIL expects to fulfill 40% of its
requirement from the Chiria mines in the long term.
Development by FY15. Management has indicated capex of
`50bn on development of the Chiria mines. The mines are
expected to be commissioned by FY15; by then, SAIL’s capacity is
likely to have expanded to ~26mtpa from 13mtpa at present.
Valuation and risks. At current market price of `161, the stock
trades at FY12e PE of 9.1x and EV/EBITDA of 7.4x. We remain
positive on the stock, given SAIL’s huge capacity addition plans,
strong balance sheet and high level of backward integration in iron
ore. Maintain Buy with target price of `201
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