Sesa Goa - Operations restart visibility remains low - Centrum

Sesa Goa's iron ore operations remained closed during Q3FY13E and as a result company suffered EBITDA loss of ~Rs1bn as fixed costs could not be recovered by pig iron and coke divisions. Pig iron sales volumes fell by 8% YoY on account of lower iron ore availability whereas coke division saw volumes increase 15% YoY.

PAT was reported at Rs4.96bn including profit from Cairn of Rs6.6bn but it also included forex loss of ~Rs250mn. Adjusted PAT stood at Rs5.1bn. We remain cautious on overall prospects of the company with Goa operations' restart visibility remaining low and Karnataka restart dependent on grant of various approvals on time.

Recommend Reduce with a target price of Rs175 based on the SOTP valuation of the proposed Sesa Sterlite group.

Source : Equity Bulls

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