Sesa Goa up on strong growth forecasts Wednesday, 22 June , 2005, 08:16 http://sify.com/finance/fullstory.php?id=13878230
Kolkata: The Sesa Goa stock is active on the bourses over the possibility of continuing strong bottomline growth this fiscal also. After last fiscal's impressive performance by this iron ore and pig iron exporter on global demand and robust margins, the company has recommended a total dividend of 250 per cent. It has also made a 1:1 bonus issue. The stock on Tuesday finished firm at Rs 603.20 with a traded quantity of 3.44 lakh, higher than the two-week average of 2.67 lakh shares on the Bombay Stock Exchange. According to analysts, the company, controlled by the Mitsui group of Japan, is expected to fare well this fiscal amid softening of iron ore and pig iron prices. "The net profit may grow steadily this fiscal too on upward annual revision in the long-term contracts. The market seems to suffer from a general confusion on indications of a weakening demand from China, Europe and the US and a downward pressure on global ore prices," an industry expert commented. This apparent confusion is being used by some as a mop-up opportunity. The promoters hold around 51 per cent of the stock while 22 per cent is held by public and 10.64 per cent by FIIs. Some analysts expect that the EPS may be Rs 150 plus this fiscal. Sesa Goa' EPS has grown to Rs 117.47 in 2004-05 from Rs 50.90 in 2003-04. According to P.K. Mukherjee, Director (Finance) of the company, the overall price increase for iron ore supplies for 2005-06 could be between 42 per cent and 45 per cent. However, he explained, that the price of coke, which had contributed a net profit of around Rs 150 crore out of the total profits of Rs 462 crore, may not be repeated this fiscal. "Coke is largely meant for domestic market and it is witnessing a cost escalation on one hand and price deceleration on the other," Mukherjee added. For the Chinese market, the price revision was much better than the previous year, but not high as the Japan Steel Mill (JSM) mark-up of 71.5 per cent. The Chinese market contributes about 50 per cent of its iron ore export basket, while the rest is for Europe and Pakistan. Regarding the prospecting rights for iron ore, acquired in Jharkhand recently, he said it would take at least one to one-and-a-half years to reach the point of seeking mining rights. He, however, explained that the company was open to the idea of setting up a pig iron plant if it was put forward as a pre-condition for mining and export of iron ore.
