Sesa Goa jumps amid volatility

-


Our Bureau

Kolkata, Aug. 1

Punters seem to be warming up for a rally in Sesa Goa. In the last one week, the stock has gone up by over 12 per cent.

According to analysts, the prospect of substantially higher rates from one-year contracts and increased tilt towards the spot market, which is fetching even higher realisations, have not gone unnoticed in certain market circles.

Enhanced Attention

However, market sources said limited delivery volumes were behind the recent appreciation.

The forthcoming bonus issue (1:1) is also a trigger for enhanced attention. It has fixed August 18 as the record date for bonus issue and sub-division of shares (from Rs 10 to Re one).

The first quarter results also suggested that the company has been able to take advantage of 100 per cent spot price mark up through higher contract-to-spot and China-to-other market ratios.

In a recent report, Indiabulls said it expected the trend of higher realisation and sales to continue during this fiscal year on account of a tight iron ore supply-demand scenario.

While contract prices for iron ore have increased on an average by 85 per cent year-on-year (as per the settlement between Rio Tinto and Baosteel), spot market prices have jumped by around 100 per cent during the period.

Indiainfoline estimated that sales-to-China increased by 70 per cent in the quarter to June 30.

Average realisation

To take advantage of higher spot rates, the company aims to sell all of its incremental production in the spot market. Indiabulls said that it hoped Sesa Goa's average realisation for FY09 to increase to $80-85 a tonne and a spot-to-contract sales ratio of 60:40.

The ratio of long-term contract sales to spot sales for the first quarter was 35:65 from last year's 74:26.

The company was able to receive an average of $90 a tonne for its spot sales from $52 a tonne in the corresponding period last year.

For its long-term contracts, the company had sold iron ore with a 6 per cent rise on an interim basis.

However, EBITDA margins are expected to remain under pressure due to the hike in the export duty to 15 per cent, increasing freight charges, and the renewal of coal contracts in H2 '09 at higher rates

Popular posts from this blog

IOB capitalises on hike in stake by LIC

-
Indian Overseas Bank rose 1.53% to Rs 46.45 at 10:31 IST on BSE, after the biggest domestic instutional investors Life Insurance Corporation of India hiked its stake in the state-run bank. The bank made this announcement after trading hours on Wednesday, 25 March 2009. Meanwhile, the BSE Sensex was up 126.19 points, or 1.31%, to 9,794.09. On BSE, 31,003 shares were traded in the counter. The stock had an average daily volume of 1.93 lakh shares in the past one quarter. The stock hit a high of Rs 47 and a low of Rs 45.95 so far during the day. The stock hit a 52-week high of Rs 156.80 on 2 May 2008 and a 52-week low of Rs 37.55 on 9 March 2009. The mid-cap bank stock had underperformed the market over the past one month till 25 March 2009, falling 3.17% as compared to the Sensex's 8.60% rise. It had also underperformed the market in the past one quarter, declining 33.94% as compared to the Sensex's 1.04% rise. The bank's current equ The current price of ...
Read more

Lok Housing & Constructions builds on fund raising plans

-
Lok Housing & Constructions jumped 6.99% to Rs 107.90 at 11:20 IST on BSE ahead of a board meeting to consider fund raising options from both foreign and local market, including an institutional placement. Meanwhile, the BSE Sensex was down 50.50 points, or 0.30%, at 15203.73. On BSE, 1.86 lakh shares were traded in the counter. The scrip had an average daily volume of 4.74 lakh shares in the past one quarter. The stock hit a high of Rs 115 and a low of Rs 102 so far during the day. The stock had a 52-week high of Rs 390.50 on 1 January 2008 and a 52-week low of Rs 96.25 on 12 June 2008. The scrip had underperformed the market over the past one month till 12 June 2008, falling 26.55% compared to the Sensex's 10.18% decline. It had also underperformed the market in the past one quarter, falling 31.39% compared to Sensex's 3.24% fall. The small-cap housing projects developer has an equity capital of Rs 42.88 crore. Face value per share is Rs 10. The current...
Read more

economic times picks

-
CMP: Rs 70.50 Target Price: Rs 90 CLSA Asia-Pacific Markets maintains an 'outperform' on Jagran Prakashan, with a 12-month price target of Rs 90. "An economic slowdown notwithstanding, improving literacy and income levels in Hindi heartland imply that drivers for Jagran's growth are still in place. With a 35% ad rate hike in 2008, Jagran continues to narrow the gap with its more expensive English rivals," the foreign brokerage said in a client note, after a Q&A reply from the management. "Rising newsprint prices have made Jagran cautious on launching new editions in FY09 and its focus this year will be profitability. While management has budgeted for a minor increase in FY10 newsprint prices, it believes that prices are likely to peak in Q2FY08 and decline thereon," it added. Neyveli Lignite CMP: Rs 117.15 Target Price: Rs 160 MERRILL Lynch has maintained its 'neutral' rating on Neyveli Lignite, with a price target of Rs 160 ...
Read more