Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sesa Goa’s 4QFY2011 net sales at `3,624cr were ahead of our estimate of
`2,654cr on account of higher-than-expected iron ore realisation. Net profit at
`1,462cr was also above our estimate of `1,281cr.
Top-line growth aided by higher realisation: Despite lower production during
4QFY2011 due to export ban in Karnataka and termination of third-party mining
in Orissa, sales volume grew marginally by 1.7% yoy to 7.5mn tonnes (wmt
basis). However, higher iron ore realisation led to 49.8% yoy growth in the top
line to `3,624 in 4QFY2011. During the quarter, iron ore realisation increased by
52.2% to US$100/tonne. On the operating front, EBITDA grew by 40.9% yoy to
`2,118cr. However, EBITDA margin contracted by 368bp to 58.5% yoy as the
positive impact of higher realisation was offset by increased royalty rates and
higher export duty and freight cost. Other income grew by 30.9% yoy to `169cr,
but tax rate increased by 34.7%, leading to only a 20.5% yoy increase in the
bottom line to `1,462cr.
Outlook and valuation: Sesa Goa’s reserves and resources (R&R) continue to
increase annually on account of its exploration activities. The company reported
an increase in its R&R to 306mn tonnes as of March 31, 2011 (274mn tonnes as
of March 31, 2010), indicating a mine life of over 14 years based on FY2011
production. We believe the current stock price discounts negatives such as
acquisition of minority stake in unrelated oil business via Cairn India’s stake
acquisition, increased export duty and railway freight and muted volume growth
from Goa mines. Sesa Goa is currently trading at 3.2x FY2012E and 2.3x
FY2013E EV/EBITDA. On a P/BV basis, the stock is trading at 1.7x FY2012 and
1.4x FY2013 estimates. We maintain our Buy rating on Sesa Goa and raise our
target price to `385 (`382), valuing the stock at 3.3x EV/EBITDA.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sesa Goa’s 4QFY2011 net sales at `3,624cr were ahead of our estimate of
`2,654cr on account of higher-than-expected iron ore realisation. Net profit at
`1,462cr was also above our estimate of `1,281cr.
Top-line growth aided by higher realisation: Despite lower production during
4QFY2011 due to export ban in Karnataka and termination of third-party mining
in Orissa, sales volume grew marginally by 1.7% yoy to 7.5mn tonnes (wmt
basis). However, higher iron ore realisation led to 49.8% yoy growth in the top
line to `3,624 in 4QFY2011. During the quarter, iron ore realisation increased by
52.2% to US$100/tonne. On the operating front, EBITDA grew by 40.9% yoy to
`2,118cr. However, EBITDA margin contracted by 368bp to 58.5% yoy as the
positive impact of higher realisation was offset by increased royalty rates and
higher export duty and freight cost. Other income grew by 30.9% yoy to `169cr,
but tax rate increased by 34.7%, leading to only a 20.5% yoy increase in the
bottom line to `1,462cr.
Outlook and valuation: Sesa Goa’s reserves and resources (R&R) continue to
increase annually on account of its exploration activities. The company reported
an increase in its R&R to 306mn tonnes as of March 31, 2011 (274mn tonnes as
of March 31, 2010), indicating a mine life of over 14 years based on FY2011
production. We believe the current stock price discounts negatives such as
acquisition of minority stake in unrelated oil business via Cairn India’s stake
acquisition, increased export duty and railway freight and muted volume growth
from Goa mines. Sesa Goa is currently trading at 3.2x FY2012E and 2.3x
FY2013E EV/EBITDA. On a P/BV basis, the stock is trading at 1.7x FY2012 and
1.4x FY2013 estimates. We maintain our Buy rating on Sesa Goa and raise our
target price to `385 (`382), valuing the stock at 3.3x EV/EBITDA.
No comments:
Post a Comment