Book profits in Sesa Goa, advises SP Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18, "In Sesa Goa one should go for profit booking because if you go with the positive bias which has been holding the stock may be for last about one week or so. The developments which have happened in the month of September inspite of the new float of about 200 crore shares coming in respect to this company – earlier equity was 85 crore now that got increased to about 290 crore inspite of that the share is holding firm largely on the hopes that Supreme Court will be awarding or giving some order in respect to liquidation of their 3 million tonne of inventory lying at Goa, which can realize about Rs 2000-2500 crore.”

He further added, “If you take this total entire merged entity now Sesa-Sterlite they are holding stake – the positive cues are there in respect to acquiring the residual stake of government also in respect to Hindustan Zinc, 29 percent and 49 percent in Balco. But let us not forget that Vedanta Aluminum has seen an investment of Rs 52000 crore and that is lying stuck. That is unproductive or may be loss making as of this date.”
“Even if you go by the acquisition of 38 percent stake by the company in Cairn India that has come at a very expensive rate because they have assumed the debt of about USD 5.9 billion when they acquired that 38 percent stake from the principal parent Vedanta. So, now the company also has a debt of Rs 75000 crore.”
“On one hand when we are so scared with the companies having such a huge debt even if it is backed by assets like stake in Hindustan Zinc, their own copper plant, 58 percent stake in Cairn India and all sort of things still Rs 75000 crore debt is very scary. So, may be the long term scenario you may get to see a price of Rs 190-195 when the Supreme Court order will come favourable in respect to the Goa iron ore inventory but I will advice to book profit at the current levels.”