My View On SESA GOA

About The Company

A part of the Vedanta group and the largest private sector iron ore exporter of India.The stock was highly fancied among the investor and well as the traders.

About The Results

The company has posted results for the third quarter performance has been just about ok. QoQ the performance has been very good but YoY it has not been too good. The fall in the profit margins indicates the story of the slowdown. The company also had a MTM forex loss of Rs.75.87 crore as on 31^st Dec 2008 but this has not been shown in the P&L account and would be accounted for at the end of the year.

For the quarter ended 31^st Dec 2008, its net sales was up 16% on a YoY and 63% on a QoQ at Rs.1359.85 crore. OPM fell to 45.63% from 50.06% in Q2FY09 and 63.99% in Q3FY08. Operating expenses have more than doubled - it rose 82% YoY and 74% QoQ. PAT was up 54% on a QoQ but down 4% on a YoY at Rs.470.69 crore.

During current Q3, iron ore sales were 15% higher than Q2FY08. Metallurgical coke sales price realization increased and its sales grew 11%. Pig iron production was higher but sales volume took a hit due to fall in price and it’s sales fell 25%.

It expects to end FY09 with a 25-30% growth. With a cash and cash equivalents balance at Rs.3200 crore, to which it expects to add another Rs.1000 crore cash in Q4 FY09, the company is expected to end FY09 on a higher note.

Some Cues In The Company

1. The demand of iron ore exports have risen for the second straight month in Jan as China, the world’s largest consumer of the steel making raw material, increased purchases.

2. Shipments rose to 13.9 million tonnes (mt) from 11.5mt a year earlier.

3. China’s plan to spend 4 trillion yuan ($586 billion) on housing, railroads and other infrastructure projects is reviving demand for steel in the country.

5. China purchases most of its iron ore for immediate delivery from India. Stock piles in most of the companies have also come down.

6. Over the next 7-8 years, the company hopes to have a capacity build up of 100 million tonnes but it hopes to build it to 25 million tonnes over the next 2-3 years.

About The Stock

The long term story for the stock remain intact. This is a true portfolio stock and must be bought on every dip or rather on every opportunity provided by any sudden panic in the market and stock price.

Disclaimer : I do not have any personal holding in this stock.