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Moneycontrol.com >> Message Board >> View Messages >> Sesa Goa
   You are here :     Moneycontrol     MMB    Stocks      Sesa Goa                         Most active discussions of 2006 , 2007 & 2008
Sesa Fair price (1)   24-Jul-08 20:24Tracked by (0)  
Posted by:   Guest on ( 24-Jul-08 20:24 )
Price : BSE: Rs 3194.85 ( -3.31 % ), NSE: Rs. 3195.15 ( -3.26 % )
I am trying to determine the fair price of Sesa at the end of the current financial year (March 2009)

Q1 EPS is 160.84. The company showed phenomenal growth. However this growth rate is not sustainable for the entire year. I am going to be conservative and assume a 20% growth rate for the rest of the year

the Q2+Q3+Q4 EPS for the last year was 391.65-33.37 = 358.28

Assuming 20% growth, the same this year could be 358.28 * 1.2 = 429.94

So EPS for this year = 160.84+429.94 = 590.78

Assuming a P/e of 8.5

Fair price = 8.5 * 590.78 = 5021.63

Note: I have not factored in the split/bonus. you\\`ll need to adjust correspondingly

Now 5021 could be the fair value but the market is in a bear phase. For long term investors who are ready to hold the stock for 3-5 years minimum, the current price of 3195 provides a buying opportunity.

The market is being unpredictable so I suggest you divide your total target investment in Sesa into 6 parts. and invest each part on a fixed date every month for the next 6 months as long as it is below the fair price.

This will help average the price swings.

Update the calculation of fair price after Q2 results are discussed and follow that fair price for the remaining months of investment.

And remember, investing in a bear phase is a test of character. Try not to get swayed by constant commentary on TV channels by supposed experts with vested intrests.

For a long term investor, buy now and hold.

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Boarders Outlook on Sesa Goa

positive outlook
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