Motilal Oswal has maintained neutral rating on Sesa Goa with a target of Rs 203, in its January 27, 2012 research report.
"Sesa Goa (SESA) has iron-ore reserves and resources of 306mt in Goa and Karnataka. Goa's ore is medium grade and easy to extract without blasting and crushing. The iron ore from Karnataka is of high grade but found in rocky form, which necessitates blasting and crushing. SESA is India's largest private-sector iron-ore exporter."
"SESA aims to grow inorganically and organically. The cost of mining and transport is significantly lower in Goa than in Karnataka and Orissa. SESA has a strong focus on increasing reserves over 2-3 years from the existing 306mt. Indian miners are at an advantage over Brazilian miners due to their proximity to China, the largest customer. Sesa and its subsidiary Sesa Resources Limited acquired approximately 1.5% of the total paid up share capital of Cairn India from Cairn UK Holdings Limited. With this acquisition Sesa Goa Limited along with its subsidiary, Sesa Resources Limited hold 20% of the share capital of Cairn India Limited. Stock is trading at FY13 PE of 5.9x and P/BV of 1x. Maintain Neutral with target price of INR 203," says Motilal Oswal research report.
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