Two Power Stocks to watch out for and that may Lighten up for a Brighter Diwali this year…Both also begin F & O Trading from Today

Adani Power at Rs 128…..Private Sector Power Player…..IPO was a year ago at Rs 100 in July/August 2009…so we see a 28% gain already…Permitted Lot in F & O is 2000 shares and the August 2010 Call Option for Strike Price of Rs 130 is quoted @ Rs 3

NHPC at Rs 32…..PSU….IPO was a year ago at Rs 36 in August 2009…..so we see a drop of over 10%….Permitted Lot Size in F & O is 8000 shares and the August 2010 Call Option for Strike Price of Rs 32.50 is being quoted below Rs 1…so one can take a 8000 shares position for Rs 260000 for a Premium of Rs 8000…..by end August if NHPC climbs past Rs 33.50 you start making a Profit…or else you stand to lose just Rs 8000…..If you buy 8000 shares of NHPC in the Spot you would have to pay @ Rs 260000….Instead for one month you get a similar leverage by paying just Rs 8000 !….and Government is planning a Mega IPO for PSU Giant Coal India around Diwali this year…..will not look good if another listed last year PSU like NHPC is below it’s IPO Price of Rs 36!

Think about it….Cheers !   

I’ve been told by blog regulars that Galada Power (FV Rs 10),BSE Code : 504697 was being recommended a few days ago by some  at Rs 6/7 as a multibagger

Just know this…..It has been declared sick by BIFR but as the Board is of the View that a viable rehabiltation package can be arrived at,the Accounts have been prepared on a’Going Concern ‘Basis

Ten Days ago Galada Power  was Rs 6/7…then several vested Bulk Deals have been taking place and Price moved to Rs 13/14

Those advising to buy are justifying on the basis of Real Estate Value of over Rs 40 crs of Factory Land and Office Building and One Time Settlement of Dues with Financial Institutions…..Company make no specific mention of this when declaring it’s March 31,2010 results end June 2010 

Be Careful….As at March 31,2010,Galada Power has accumulated Loss of Rs 153 crs,Non Provision of Interest of Rs 120 crs and Non Provision of additional Interest and liquidated damages payable to Financial Institutions of Rs 214 crs (it has sought waiver on this in it’s Rehabilitation Proposal) above the actual Outstandings due as on it’s Balance Sheet

 Reproduced below is the Company Declared Results as at March 31,2010 and as uploaded on the BSE site

 Know the Risks before you go Gaga or Glad on Galada……the Losses and Loans and Non Provisions are overwhelming as of now….

I have two Primary Issues…and several related ones….. with this SKS Microfinance Primary Issue

• Microfinance Industry emerged to alleviate Poverty by providing access of basic financial services like Loans and microinsurance to the poor…..I am frowning at this attempt to commercialise this Industry through an IPO at such a High Premium
• I am not going to contribute to the Profits of Pre IPO Shareholders…especially Sequoia Capital…. who are offering for Sale their Shares in this SKS Microfinance IPO that has opened today !

  16.79 Million Shares are on offer in the price band Rs 850 to Rs 985 !….of which only 7.45 million shares are Fresh Issue with IPO proceeds going to the Company while 9.34 Million Shares are Offer for Sale by Existing Investors…In fact Sequoia Capital,termed as a Promoter, is offloading 3.99 million shares in this IPO of their 9.1 million shares and will bring down their holding from 14.1 % Pre IPO Equity of Rs 64.52 crs to 7.1 % of Post IPO Equity of Rs 71.97 crs….Their average acquisition cost is Rs 61.18 only and they have been allotted shares in 2007 and 2008 in three tranches at Rs 49.77,Rs 70.67 and Rs 103.91….Just Imagine….Sequoia paid just under Rs 56 crs for their 9.1 million shares….If Rs 985 Top end Price is fixed for this IPO,the 3.99 million shares they are offering on sale will fetch them Rs 393 crs !…so they make a whopping near Rs 337 crs over their aggregate cost  for shares held for just  two to three years and yet have 5.1 million shares remaining with them !…reminds me of a similar ploy by Citigroup and Chrys Capital in the Suzlon issue a few years ago ! (Search my blog for this)                                                                                                                   There is something not right in Promoters enriching themselves handsomely by part cashing out in the IPO or pre IPO….In fact the Chief Promoter,Vikram Akula sold 9.45 lakh of his Shares just this year in February 2010 to Tree Line Asia Master Fund (Singapore) for US $ 12.92 million (works out to @ Rs 637)…In fact several top Employees also sold part of their Esop shareholdings to Tree Line for Rs 636.72….Encashing Profits of Crores like this just before the IPO brings into question Promoter and Top Management Committment to the Company….Maybe Legal…but….Feels like they are itching to exit at Rs 985 as they may not get this price again!….and inside a year Shareholders have been allotted Shares even at Rs 300….from here to the Gains are over 200%….Even after the IPO,the Pre IPO Shareholders will hold nearly 77% of the Post IPO Equity….This would entitle them to 77% of the Networth….which would have been substantially built by the Public who are paying Rs 985 per share in the IPO !…Nah !…now why would the Public do this ! ?…they are merely looking at one side of the Equation that they will benefit from the Share Price above Rs 985….they fail to see that their Rs 985 is creating Huge Assets of which they will merely own 23%…..while 77% will be owned by Pre IPO Shareholders who have contributed in the past one to three years just an average acquisition price of  Rs 24.54 to Rs 137.53 (Promoters) and upto just Rs 300 for Non Promoters     

While contending with my emotions on the above two issues, the High,near obscene IPO Price Band of Rs 850 to Rs 985 makes it easier for me to say ‘No’ to this Issue

One pays such high Premiums for a Rs 10 Face Value Share only if excited on massive non linear growth in Profits coming up in the near future and significant scalability of Operations…..but when over half of the Shares on Offer are actually Offer for Sale by existing Shareholders,one needs to be on alert and say “Hey ! Hold On ! Let’s have a better look at this !”

At Top end Rs 985 the IPO Size is Rs 1650 + crs of which only Rs 734 crs will go to the Company…..Market Cap will cross Rs 7200 crs if listing is around these levels

In my humble Opinion,Rs 850 to Rs 985 is simply too high a Price to pay right now for SKS Microfinance,despite the scalability potential…have a look at the past five years selected financials

 Now the Post IPO Equity will be Rs 71.97 crs and at Rs 985 Top end the Net IPO Proceeds that will accrue to the Company will be Rs 734 crs…thus Networth will move from Rs 950 crs at March 31,2010 to Rs 1730  + crs post IPO assuming Q1 Profits of Rs 50 crs…that’s a Book Value of Rs 240….this is a 4 Book Multiple of Top End Price of Rs 985

What SKS Microfinance is attempting to do with such a High Premium IPO is what Reliance Power and even Future Capital Holdings did in the past in 2008 !…Create High Networth through Obscene Premiums and Minimum Equity Dilution ….and both are quoted horribly below IPO Pricing….In fact Biyani’s Future Capital Holdings came at Rs 765 in January 2008…It’s Rs 247 today !…. 

However SKS Microfinance may not quote horribly below IPO Pricing because of scalability potential….in fact Rs 50 is the grey market Premium currently….Optimists can look at it this way…At March 31,2010 it showed  a Networth of Rs 950 crs and a PAT of Rs 175 crs…At March 31,2011 it will surely show a Networth of near Rs 2000 crs and a possible PAT of Rs 250 crs….that’s yet a high 28 multiple on a Possible FY 11 EPS of Rs 35 at Rs 985 IPO Price…now if it’s a straight double networth and double profits that means a PAT of Rs 350 crs,an EPS of Rs 49 and a Earnings Multiple of 20 !

I’m not recommending this Issue…but if you want to contribute to the Profits of Sequoia…be my guest !

An ABBA songs comes to my mind ” Money ! Money ! Money !…it’s a Rich Man’s World !”

Intentions of Promoters and Pre IPO Shareholders may be Noble….but Actions are clearly Profit Motivated and not singularly Selfless

Cheers !

Piggery : A Farm or Enclosure where Pigs are Kept

…so if you ride Piggy Back on RJ,GS,JP,CLSA,CG etc,the Movers & Shakers in our Stock Markets,does that make our Stock Exchanges Piggeries ! ?….Enclosures for Thousands of Stocks that Stink ! 

Cheers to a Chuckle !….Oink ! Oink !

…..a Lovely Wet Saturday Morning in Mumbai…

……and what a lovely divine and warm sight of Squirrels and Sparrows and even a Parrot today ( flew away before I could click properly !) around and even on our Plants…and picking on rice grains that we offer everyday…in fact when the grains are over they make such a racket to remind us !…squirrels even boldly venture into the Floor of our Living Room to make this Point!….we get some Crows too…and they are deaf to the Mumbai Indians IPL Horns that we blow to shoo them away…wondering if a signboard ‘Crows not Welcome’ will do the trick!…would not mind them if they don’t shoo the others away and hog all the grains !

…and we’re on the fourth floor ! 

Have a Great Weekend…Cheers!

In December 2009 I had recommended Gati at Rs 58 as a SS 2 Scriptech Stock Select with a target of Rs 80 inside Twelve Months…..Gati closed today at Rs 86 + achieving  near 50% absolute returns inside eight months…what now?…….Significantly above average volumes indicate there is steam yet ahead and a price of Rs 100 is possible in the short term 

However selling,even partially, can be considered in two situations

• Need to reduce Equity Component in a Portfolio Rebalancing Exercise
• Need to be Prudent and realise Profits

So you can get a sense and feel of Gati and why we had recommended it and draw your own inferences on the path ahead for it,I have reproduced below a comprehensive extraction from our Gati Recommendation Template emailed to Clients in December 2009….we yet continue to have exposure in Gati

China and USA…different political idealogies that makes for strange bedfellows….China deliberately keeps it’s Yuan low to benefit from exports to USA…get’s paid in US Dollars which it reinvests substantially in US Government Treasuries !..nearly US $ 900 billion of the US $ 2.3 Trillion Fx Reserves of China are invested in these Treasuries

USA was threatening to declare China manipulator of Currency…China agreed to revalue it’s Yuan upward a wee bit recently and also has just declared their continuing faith in the US Dollar and US Treasuries !

That’s some Consolation between the two on the surface….but the undercurrents run deep

Here are two Alerts….you can put it this way….one by China for USA and the other by USA for China! 

• Is China facing a Housing Bubble ?…the Western Countries seem to think so
• A Chinese Credit Rating Agency has just downgraded USA from  ‘AAA’ to  ’AA’ Country Rating

Is China facing a Housing Bubble ?

Have a Look at the above Graph that matches the Value of Residential Housing against the Country’s GDP for USA,Japan,Hong Kong and China

In 1989,Japan shows a peak level of 3.8  and since shrunk to 2….Japan has been facing Economic Woes for the past two decades now…..China has reached an alerting level of 3.5 and if historic precedent is to be believed for this parameter,the Fall is inevitable….China is heading for a Real Estate Bubble soon

A Chinese Credit Rating Agency has just downgraded USA from  ‘AAA’ to  ’AA’ Country Rating

Two months ago in May 2010 ago I had blogged on how the top Credit Rating Agency S & P yet continued USA’s Rating at ‘AAA’ 

S & P’s Sovereign Rating of USA remains at Top ‘AAA’….Amusing!

Friday, May 21st, 2010

Now China’s leading Credit Rating Company,Dagong Global Credit Rating Co has downgraded USA from ‘AAA’ to ‘AA’

The World’s Top Three Credit Rating Agencies…all based in the West….S & P,Moodys and Fitch….. have come in for  some scathing attacks…and justifiably too…they have lost considerable credibility in the past few years for their failures to spot and alert proactively  and, even more stupidly, reactively on Lehman’s Collapse,the Sub Prime Dangers,the Greece Problem among others….seems these rating agencies are a cartel with vested interests and agenda….when a Problem is so apparent even to a Commoner,it becomes difficult to believe that these Top Agencies run by Top People out of Top Colleges and Institutions and with Top Pedigree Degrees and Positions are really Dumb,Stupid and Incompetent or even Complacent!…..so the conclusion is that the ‘High Ratings’ maintained for Corporates and Countries by these Western Agencies is a deliberate Game plan not to break the Hand that’s feeding you…combined probably with a Political agenda too !…..Bloody Shame !

Though Dagong may not wield much global Influence,it’s action last week to downgrade USA will be seen as an unbiased and Non Western View of USA….a Pioneering and courageous forward step to call a Spade a Spade….despite the fact that China itself has a near US $ 900 Billion Investments in US Treasuries….and it may lead to a weakening Dollar and an increased Risk Premium for Dollar Investments and a fall in the Value of Dollar Investments….a True and Tough Call made by Dagong for USA, a Country whose massive Deficits will lead to Massive Debts that will soon eclipse it’s own GDP 

Where will our Sensex head now in the second half of 2010 ?

So while both USA and China continue to hope that Stimulus packages will bale their Economies out and GDP Growth rates would gradually move up or at least the decline will be stemmed,where does this leave India……Our Country is not decoupled enough yet not to feel the adverse Impact in case USA and China shrink….Fed Governor has finally removed the Gloves and warned Congress last week that the Labour,Housing and Credit Situation in USA yet remains dangerously worrisome

Our Sensex has crossed 18000 and Nifty 5400 while the Dow is struggling to stay above 10000….What if the Dow seeks lower 8000 levels by 2010 year end ! ? where would our Sensex head then !?….the way I see it on a macro level is like this…..when 2010 began I called that the first half of 2010 would see a Sensex range of 14000 to 18000…this was on the mark…..the second half has now commenced…I see our Sensex range in this half to be 16000 to 20000….the upmove range is considering that India will benefit from Good Monsoons,strong FII Inflows,Higher GDP Growth rate of 9.5% forecast for FY 11,Infrastructure and Consumption India Story being intact and strengthening of Corporate Earnings…my contention is that these positive drivers will net out the negatives of continuing High Inflation,increasing Interest rates and a possible Downtrend in USA and China Economies, Stock and Real Estate Markets….16000 on the Downside would me more by default if the Dow or China shrinks 

However on the Cautious Side,the Short Term does not strongly indicate a One Way Upward Movement for the Sensex…therefore you will have to contend with Volatility…..Therefore A Bottoms Up Approach with Specific Stock Selection would probably fetch you better returns than a Top Down or Index Strategy in the Short Term

Cheers !    

It was destined…Legend and controversial Muttiah Muralidaran,Murli for short,the magical 38 year old Sri Lankan Spinner has just taken the last Indian Wicket to reach the coveted magical 800 Wicket Mark in Test Cricket in his Swan Song Test match

The Sri Lankan Captain was naturally kind and by design gave Murli a long spell so he had a good chance to reach this historic landmark…in fact India faced 115.4 overs in their Second Innings,of which Murli bowled 44.4 overs for his 3 for 128…he had mauled India in the first Innings too capturing 5 wickets for 63 runs for an overall match haul of 8 Wickets for 191 runs

Sri Lanka need just 95 to win this First Test match in the Indo-Lanka Series at Galle and they have  enough time to do so on this fifth and last day…Indians are praying for Rain !….India would have lost in four days as one full day was rained off in this Test Match….The two Sri Lankan Bowling ‘Ms’ made the difference…Malinga and Murli…both turning out to be match winners….between them they took 15 of the 20 Indian Wickets…..Indians have been truly outplayed in this first Test Match…Our Bowling has lacked Penetration and our Batting has lacked the Application to stay at the Wicket for Long…. required for Test Cricket

The 800 Wicket Feat achieved by Murli can be assessed for it’s Greatness when viewed in Perspective of other Top Test Wicket takers……Shane Warne is next at 703 with Anil Kumble following at 619…Kapil Dev,Richard Hadlee,Wasim Akram,Courtney Walsh etc have all taken more than 400….but all have retired….In fact there is no playing cricketer who has taken 400 and more Test Wickets and Murli has announced his retirement too

Murli has his share of detractors too….they feel he is a ‘Chucker’ and his bowling action is not legal in the traditional sense and therefore he is undeserving of such a record….laws may have been amended to legitimise his action….but the undeniable fact is that Murli could turn the Ball viciously on even a Flat Wicket

Murli has achieved this record of 800 Test Wickets in an 18 year career spanning from 1992 to 2010,playing 133 Test Matches with 9/51 being his best bowling figures in a single Innings….he’s given away 18180 Runs so his wickets came at an average of 22.73 runs

With fewer Test Matches being played relative to ODIs and T20s and the fact there is no Currently Playing Bowler who has even crossed 400 Test Wickets,Murli’s Record of 800 Test Wickets in unlikely to be eclipsed atleast in the next 10 years !

Feel Warm that Murli has achieved this magical 800 Wicket Mark….We’ll Miss You Murli

Tuesday Tale No 1

Have you ever been extended an invitation on Sunday evening for a Tuesday Dinner by Close Friends?…and you land up at their Residence on Tuesday and find the Hosts had simply forgotten about their Invite ! ?

It happened to us yesterday…My Wife and I were invited by really close friends for Dinner…just the four of us at their Residence…..we were told to come by 9.30 pm…Social Etiquette meant we reach by 9.45 pm…we did with our small Gift..a Box of Chocolate Cookies …only to find the Hostess in her Night Gown and simply no trace of the Host….she was so embarrased….we could either have got mad or laugh it off……we chose to do the latter…we gave the Cookies and quickly exited !…The Hostess told us that she had told her Husband Host to remind her in the Morning for the Dinner and he had forgotten and so had she !

Normally we don’t accept weekday dinner invites as Work Days could be tiring….and as it gets late into the Night,the next day begins with yawns!…and and especially with these friends the night would have gone past 1 am…probably 2 am as Dinner too is served at Midnight! !…they had invited for the weekend but as this was not possible we confirmed for Tuesday night….we had accepted as we had not met them for quite a while and  either they or us  were travelling or had other commitments and they were insisting that we meet and we are close friends!  

…Their Forgetting turned out to be a blessing in two ways……..The First was that we completed in the morning itself our Tuesday Religious Ritual of visiting the SiddhiVinayak Temple and St Anthony and Infant Jesus Shrine…in recent past our tight day schedule has meant doing this routine tired and sleepy past 11 pm in the night

……The second is that we yet had to have Dinner,so we rushed to catch the last order at 10.30 pm for Dinner at the Club and it turned out to be heavenly…and as usual great value for Money…I’ve been telling Wife to shut our Kitchen and just eat at the Club!…Rs 26 for the Soup of the Day…a wholesome Spinach and Corn Thick Soup served with hot crosissants with Butter chiplets on the side…Rs 57 for half portion of one of the Main Choices for the day and that can be shared easily by two….A Tasty Subz Hyderabadi that was Paneer,peas,corn,beans and carrots etc in a Green Gravy served with Rice (you could opt for Naan instead),Pickles,Salad and Roasted Papad…Wife preferred a Continental Choice for Rs 135 that she swooned over…Herbed Rice with a Fabulous Stew cooked in a rich brown non spicy gravy with Fresh Thyme and other herbs served with Boiled Vegetables as an accompaniment….washed down by her with a Coke with Ice,rather Ice with Coke (as she fills up the Glass with over Ten Ice Cubes and then pours the Coke !) for Rs 20 and by me with a Draught Beer for Rs 35….there were just a few tables occupied in the Dining Room on a Tuesday Night…so the service was very attentive….we skipped Dessert of the Day…a Blueberry Cheesecake or Fresh Orange IceCream…both below Rs 50….wonder how the Club,with all it’s Overheads, can afford such lovely low Pricing !…Good for us ! 

…….and we got home by 11.30 pm !….before midnight !….so had a Good Nights’ Sleep

Tuesday Tale No 2

India’s ‘Aam Aadmi’ is truly Honest..Diwakar Patel,a middle aged portly and bespectacled Bus Conductor on a Short Circular Route 155 from Grant Road Station through Tardeo,Haji Ali,Mahalakshmi,Peddar Road,Kemps Corner,Gowalia Tank and Nana Chowk…… I got a confirmed sense of this ‘Honesty’ yesterday….It has to be a Coincidence that my Quote for the Day in Office for July 20 from the Daily Calender read ” You Must not lose faith in Humanity.Humanity is an Ocean;if a few drops of the Ocean are Dirty,the Ocean does not become Dirty.”

Wife had the Car and I had to rush for the above dinner…was in office at Tardeo till late past 8.30 pm and had to get home first at Peddar Road…Taxis often refuse to ply short distances…saw a Bus No 155…hopped into it to alight just a few minutes and stops away…saw this Bus Conductor counting a Big Bundle of Small Denomination Notes of Rs 10,Rs 20 and Rs 50….asked him if he could give me change for Rs 100 or Rs 200…said he can for Rs 900 !…so I gave him Nine Notes of Rs 100 notes for the Change…From what he gave me I reflexively offered him Rs 10 for this favour…..He outright and quite firmly refused and in one motion rubbed his hand over his forehead,indicating his ‘Naseeb’ and Destiny and Fate is written on his forehead while proudly asserting that in his 17 years of service with BEST he has lived honestly and with dignity and with a loyal sense of duty and would not take any money that was not his by right !…What a Guy !

Reminded me of a Bus Conductor and Saint story ” I nearly sold my Conscience for Rs 1!” that was send out by email by my father- in- law a week ago…he sends out daily such messages to over 500 people and has also got a  Small White Board put up in the Building where he religiously and daily pens an inspiring Thought for all….The Story goes like this….A Saintly Person’s reputation precedes him when he shifts towns…he gets into a Bus and the Conductor gives him Rs 1 more than Due back in Change….He deliberates whether to return this Rs 1 to the Conductor…he finally does this on alighting from the Bus….it is then that the Bus Conductor tells him that he had deliberately given an additional  Rs 1 back in Change as he was aware of the Saintly reputation of his and was simply testing it !…Wow !      

Tuesday Tale No 3

This is about my daughter,who’ll turn 15 later this year…she’s an India Probable…the only girl from Maharashtra…. and away at a 40 day ongoing Football Camp to select the Women u 16 Football Team for India…..we speak to her everyday….but she had called us yesterday morning to tell us that a girl from another State in another room had started screaming inexplicably and uncontrollably on Monday late night and had to be physically constrained and hospitalised…my daughter wanted to know how this could have happened…she said that there were rumours that she was possessed!….I told her it could have been an epileptic fit…was important to know the girl’s past medical history……told her not to be unduly disturbed……then she called again late in the evening to tell us that this Girl has returned from the Hospital and has been send to their Room !…my daughter shares her room with three other girls from three different states…now with this fifth girl too they all were a bit scared…naturally !….this morning she called at 7 am!…asked her why she was not at the morning 6 am to 7.30 am Practice…seems none of the four girls slept last night ! and the kindly Coach sensed this and send them back to rest this morning !…Phew!…told her to pen her experiences,funny or scary, at the Camp for later submit it for the Prestigious Annual School Magazine…told her to have a sunny and positive outlook and attitude on all experiences…it will help her in her game too…..firm up her mental toughness too and negate negative influence of  mindgames and make her a better and kinder and more tolerant Human Being….Competition is tough among 40 Girls from over 15 States vying for a place in a 22 Member India Team…told her to keep working hard and not to find success and that it would assuredly find her

Tuesday Tale No 4

…and for those who vist my blog just for Stock Ideas….IFCI has crossed Rs 60 and GATI has surged past Rs 75 today from levels of Rs 58 just a few weeks ago….we have exposure in both and my targets are yet some way ahead 

I just Love Tuesdays !….just like I love all Other Days of the Week too!  

Cheers !

Expected this… a fabulous Q1 FY 11 for Sesa Goa… It’s best first quarter in history.. a consolidated net Profit of Rs 1302 crs giving an EPS of over Rs 15 on an Equity of Rs 85.97 crs (FV Rs1)… this was achieved due to higher Iron Ore Prices in the Quarter and good offtake by China and consolidation of Dempo Companies acquired in June 2009

So what’s prompted many leading FIIs to call a ‘Sell’ on Sesa Goa ?….. Prices have eased off and China is expected to slowdown offtake…. moreover it is widely expected that the Government will introduce a Special Tax on Windfall Profits just as has been proposed in Australia or may raise royalty rates…. and may even take an extreme step of curtailing or banning exports of iron ore…. Moreover Sesa Group is facing an investigation from the Serious Fraud Investigation Office for mismanagement, malpractices, financial and other irregularities ….. there is also the question of the pending amalgamation from April 1, 2005 of subsidiary Sesa Industries with Sesa Goa.. Sesa Group has moved the Supreme Court after the High Court had overturned an earlier order in it’s favour and the validity of the scheme has been extended to October 31, 2010…. an aggrieved shareholder had filed the case and Sesa suspects that this shareholder too is behind  the SFIO Investigation

In light of all of this the key question is whether  profits can be sustained at these levels in the rest of FY 11 to create a net of over Rs 4500 crs and take FY 11 EPS past Rs 50 or are we going to witness a cramped three quarters remaining in FY 11 where the aggregate profits of Q2 to Q4 would equal Q1 Profits and give a total net of just Rs 2500 crs thereabouts and an EPS of nearer Rs 30 ?

So we have a probable EPS range of Rs 30 to Rs 50 + to contend with in FY 11… At the current Rs 350 Share Price we then get a Forward FY 11 Multiple of 7 to 12 to live within…. taking a fairly conservative multiple of 10  we then get a Share Price range of Rs 300 (EPS 30) and Rs 500 (EPS 50)…. so we can say that there should be a limited downside from here… and there is a strong case for upside given such a strong Q 1 FY 11 and strong Current Consolidated Reserves of over Rs 9136 crs ( Rs 7834 at March 31, 2010 + Q 1 FY 11 PAT Rs 1302 crs) at June 30, 2010 giving a Book Value of Rs 106 that should cross Rs 120 this year as Reserves march past Rs 10000 crs… that’s a Book Multiple of under 3

One FII has just made a positive call with a  target of Rs 440 for Sesa Goa

Profits are real… and Cash Flow is strong… We yet continue our exposure to Sesa Goa…I t has rewarded clients splendidly in the past two years from cum bonus and split levels of Rs 3200 in July 2008… that’s a cost of Rs 160 ex bonus and ex split…. it had scaled near Rs 500 after hitting depths of Rs 60 last year… it ’s retracted on above concerns to current levels of Rs 350

Interesting FY 11 for Sesa Group… Real Windfall Profits and Real Concerns…. Interesting Play

Cheers !