Sesa Goa - 1QFY2014 Result Review - Angel Broking

Sesa Goa's (Sesa) 1QFY2014 net profit was slightly ahead of our and street expectations mainly due to higher-than-expected income from share of its associate, Cairn India. Sesa's net sales declined by 78.2% yoy to Rs. 378cr as there were no iron ore sales from Goa due to mining ban in the region. Its Pig iron and Met coke gross sales, however, grew 235.3% and 16.1% to Rs. 134 and Rs. 322cr, respectively. Sesa reported an EBITDA loss of Rs. 43cr during 1QFY2014, compared to a positive EBITDA of Rs. 676cr during 1QFY2013. Excluding income from its associate (Cairn India), its PAT loss stood at Rs. 211cr, compared to a PAT of Rs. 199cr in 1QFY2013. Sesa reported a share of income from associate (Cairn India) of Rs. 625cr during 1QFY2014, compared to Rs. 765cr during 1QFY2013. Consequently, its reported PAT decreased 57.0% yoy to Rs. 414cr. Sesa reported an exceptional item relating to forex loss of Rs. 99cr in this quarter and hence adjusted PAT after exceptional items declined by 57.8% yoy to Rs. 514cr. Considering the ongoing process of group restructuring by the promoter, Vedanta Resources, valuation of Sterlite will mirror the valuation of the consolidated company, Sesa Sterlite.

We maintain our Buy rating on the Sesa while we keep our target price under review.

Source : Equity Bulls

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