Expect 15-20% upmove in Sesa Goa: Mukadam

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Expect 15-20% upmove in Sesa Goa , says Shahina Mukadam , Varun Capital Markets.

Mukadam told CNBC-TV18, "I will pick up Sesa Goa. We are seeing very strong up move on iron ore prices and this is going to reflect very positively in the renegotiated prices that this company will be doing going forward with the large steel majors. The Dempo acquisition that was made in the first quarter of the year, I think the volumes that it has added to the reserves of Sesa Goa are not really factored into the price as of now. I think almost about 60% of additional reserves have come in to Sesa Goa because of the acquisition."

She further added, "If you see the balance sheet it was debt free before the acquisition and just about the acquisition cost about UD 400 million which was funded of course with an FCCB of USD 500 million. But even if you factor that in account the debt equity remains less than 0.5 times, so I think that is a very-very strong balance sheet and valuation wise is at around 12 times one year forward earnings, it is available at an attractive level and we can expect about 15-20% up move from here."

Sesa Goa has touched an intraday high of Rs 463.90 and an intraday low of Rs 444.40. At 11:46 hrs the share was quoting at Rs 461.00, up Rs 8.85, or 1.96% with volumes of 1,109,808 shares.

The company's trailing 12-month (TTM) EPS was at Rs 20.46 per share. (Dec, 2009). The stock's price-to-earnings (P/E) ratio was 22.54. The latest book value of the company is Rs 54.97 per share. At current value, the price-to-book value of the company was 8.39. The dividend yield of the company was 0.49%.