Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sesa Goa
U n c e r t a i n t i m e s … .
Sesa Goa’s Q1FY12 numbers came broadly in line with our estimates. Net
sales stood at | 2108.9 crore (I-direct estimate: | 2201.4 crore). Sales
volumes came above our estimate at 4.4 million tonnes (MT) (I Direct
estimate of 3.6 MT) whereas realisation came below our estimate at |
4500/t (I-direct estimate: |4800/t). EBITDA margins declined sharply by
620 bps YoY and 420 bps QoQ reflecting the full impact of higher export
duty payment and rising cost pressures. The interest cost rose
significantly as the company acquired debt to fund its open offer of 8.4%
stake in Cairn India Ltd. Due to withdrawal of EoU benefit, the tax rate of
the company increased to ~31% as against ~18% in Q1FY11. This has
led to a sharp decline in the profitability by ~36% YoY and ~44% QoQ.
ƒ Decline in volumes
In Q1FY12, iron ore volumes declined ~12% YoY and ~36% QoQ to
~4.3 million MT. This was mainly due to closure of its Odisha
operations and lower contribution from Goa (decline of 5,00,000 tonnes
YoY to 3.4 MT). However, volumes from Karnataka registered growth of
5,00,000 tonnes YoY taking total volumes to 1 MT.
ƒ Reduction in volume guidance by management
The management has initially guided for 20-25% volume growth, which
has now been toned down to 15-18%. This was primarily on account of
a delay in obtaining approval to export iron ore from Karnataka,
logistical issues and delay in obtaining additional ECs in Goa.
V a l u a t i o n
At the CMP of | 282, the stock is trading at 6.3x and 5.6x its FY12E and
FY13E EV/EBITDA, respectively. We believe the new mining bill, if
implemented, is likely to impact the profitability of the company
significantly. 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 | 294 and assigned a HOLD
rating to it.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sesa Goa
U n c e r t a i n t i m e s … .
Sesa Goa’s Q1FY12 numbers came broadly in line with our estimates. Net
sales stood at | 2108.9 crore (I-direct estimate: | 2201.4 crore). Sales
volumes came above our estimate at 4.4 million tonnes (MT) (I Direct
estimate of 3.6 MT) whereas realisation came below our estimate at |
4500/t (I-direct estimate: |4800/t). EBITDA margins declined sharply by
620 bps YoY and 420 bps QoQ reflecting the full impact of higher export
duty payment and rising cost pressures. The interest cost rose
significantly as the company acquired debt to fund its open offer of 8.4%
stake in Cairn India Ltd. Due to withdrawal of EoU benefit, the tax rate of
the company increased to ~31% as against ~18% in Q1FY11. This has
led to a sharp decline in the profitability by ~36% YoY and ~44% QoQ.
ƒ Decline in volumes
In Q1FY12, iron ore volumes declined ~12% YoY and ~36% QoQ to
~4.3 million MT. This was mainly due to closure of its Odisha
operations and lower contribution from Goa (decline of 5,00,000 tonnes
YoY to 3.4 MT). However, volumes from Karnataka registered growth of
5,00,000 tonnes YoY taking total volumes to 1 MT.
ƒ Reduction in volume guidance by management
The management has initially guided for 20-25% volume growth, which
has now been toned down to 15-18%. This was primarily on account of
a delay in obtaining approval to export iron ore from Karnataka,
logistical issues and delay in obtaining additional ECs in Goa.
V a l u a t i o n
At the CMP of | 282, the stock is trading at 6.3x and 5.6x its FY12E and
FY13E EV/EBITDA, respectively. We believe the new mining bill, if
implemented, is likely to impact the profitability of the company
significantly. 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 | 294 and assigned a HOLD
rating to it.
No comments:
Post a Comment