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P e r f o rma n c e imp a c t e d b y mu t e d s a l e s v o l ume s . . .
Sesa Goa’s performance in Q2FY12 was below our expectation on the
back of lower-than-expected sales volume, subdued income from
investments and mark to market (MTM) loss on foreign currency
borrowings. In Q2FY12, iron ore sales volumes stood at 1.55 million
tonnes (MT) (as against our expectation of 2.1 MT). The iron ore
realisation during the quarter under review stood at ~US$83.7/tonne (as
against our expectation of US$90/tonne). The topline during the quarter
stood at | 789.7 crore (lower by 14% YoY and 62.6% QoQ). The other
income stood at | 50.4 crore (lower by 50% YoY and 67% QoQ). During
the quarter under review, there was forex MTM loss to the tune of |
234.09 crore on outstanding FCCBs and foreign currency loan, which
dented the reported PAT significantly. The ensuing reported PAT during
Q2FY12 stood at | 1.28 crore.
ƒ Muted sales volumes
Sesa Goa reported subdued sales volumes in Q2FY12. Sales
volumes stood at 1.55 MT as compared with 1.82 MT (1.37 MT
excluding Orissa) in Q2FY11. At Karnataka, the company sold 0.71
MT of iron ore in Q2FY12 (0.45 MT in Q2FY11) while at Goa the
company sold 0.83 MT of iron ore in Q2FY12 (0.92 MT in Q2FY11).
ƒ Realisations for Q2FY12 lower both QoQ as well as YoY
Sesa Goa reported subdued realisations for Q2FY12, which was
lower both QoQ as well as YoY. The company’s iron ore realisations
stood at | 3834/tonne (lower by 2% YoY and 15% QoQ).
V a l u a t i o n
At the CMP of | 206, the stock is trading at 7.5x and 6.5x its FY12E and
FY13E EV/EBITDA, respectively. We have valued the stock on an SOTP
basis where we have valued the core business at 4x FY13E EV/EBITDA
and assigned a 30% holding company discount to the investment value in
Cairn India Ltd. Thus, we have arrived at a target price of | 203 and
assigned a HOLD rating to the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P e r f o rma n c e imp a c t e d b y mu t e d s a l e s v o l ume s . . .
Sesa Goa’s performance in Q2FY12 was below our expectation on the
back of lower-than-expected sales volume, subdued income from
investments and mark to market (MTM) loss on foreign currency
borrowings. In Q2FY12, iron ore sales volumes stood at 1.55 million
tonnes (MT) (as against our expectation of 2.1 MT). The iron ore
realisation during the quarter under review stood at ~US$83.7/tonne (as
against our expectation of US$90/tonne). The topline during the quarter
stood at | 789.7 crore (lower by 14% YoY and 62.6% QoQ). The other
income stood at | 50.4 crore (lower by 50% YoY and 67% QoQ). During
the quarter under review, there was forex MTM loss to the tune of |
234.09 crore on outstanding FCCBs and foreign currency loan, which
dented the reported PAT significantly. The ensuing reported PAT during
Q2FY12 stood at | 1.28 crore.
ƒ Muted sales volumes
Sesa Goa reported subdued sales volumes in Q2FY12. Sales
volumes stood at 1.55 MT as compared with 1.82 MT (1.37 MT
excluding Orissa) in Q2FY11. At Karnataka, the company sold 0.71
MT of iron ore in Q2FY12 (0.45 MT in Q2FY11) while at Goa the
company sold 0.83 MT of iron ore in Q2FY12 (0.92 MT in Q2FY11).
ƒ Realisations for Q2FY12 lower both QoQ as well as YoY
Sesa Goa reported subdued realisations for Q2FY12, which was
lower both QoQ as well as YoY. The company’s iron ore realisations
stood at | 3834/tonne (lower by 2% YoY and 15% QoQ).
V a l u a t i o n
At the CMP of | 206, the stock is trading at 7.5x and 6.5x its FY12E and
FY13E EV/EBITDA, respectively. We have valued the stock on an SOTP
basis where we have valued the core business at 4x FY13E EV/EBITDA
and assigned a 30% holding company discount to the investment value in
Cairn India Ltd. Thus, we have arrived at a target price of | 203 and
assigned a HOLD rating to the stock.
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