Buy Sesa Goa, tgt Rs 4365: HEM Securities

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HEM Securities has maintained buy rating on Sesa Goa with target price of Rs 4365 in its March 04, 2008 research report. "The rise in global steel production has lead to rise in the demand for coke across the globe and China which is a dominant exporter of coke has increased the export duty on coke from 15% to 20% in January 2008 as a result of which the prices of coke have increased to all time high. Sesa Goa imports coking coal for the manufacturing of coke while the cost of its coking coal is fixed through long term contract, it sells coke at the current price therefore strong coke price would drive the margins for the company."

 

"The current industry scenario and rising iron ore price are expected to drive the future growth of the company and with the large capacity addition plans in the future the company will capitalize on both the front. The stock at the current market price of Rs 3,425 will trade 13.19 times to its earning per share of Rs 240.40 (TTM basis) and will trade 9.31 times to its book value of Rs 367.69. The stock looks attractive at the current valuation with the strong upside potential in the medium to long term. Therefore, we are initiating 'BUY' signal on the stock with the target price of Rs 4,365 which is approximately 27% up from the current market price of Rs 3,425," according to HEM Securities research report.  

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Attachments : Sesa Goa Ltdpdf