Mineral Resources

Both Iron Ore Producers,Sandur Manganese and Sesa Goa have turned in mind boggling Q1 Results…yet Mr S Y Ghorpade, Chairman &  Managing Director of Sandur says that the Rising Prices of Iron Ore may not sustain  while Mr P K Mukherjee,Managing Director of Sesa Goa says the record US $ 140/T FOB Mangalore is indicative of things to come and he expects a fantastic year

Sandur is on down circuit  by 5% at Rs 1308.75 today.It notched Rs 64.31 Net on an Equity of Rs 8.75 crs (FV Rs 10) giving a record unannualised EPS of Rs 73.36…..Notwithstanding caution given by Mr Ghorpade,Sandur should record an EPS of close to Rs 300 this year…this gives a multiple of just over 4

On Sesa Goa I have commented on it several times past few days,even yesterday…check out earlier blogs…It at Rs 3380 Cum 1:1 Bonus and Cum 10:1 Sub Division right now….goes X on August 8,2008 and must be in your portfolio  

Calcined Petroleum Coke Producers,Rain Commodities and Goa Carbon are on a bull run as prices of CPC reach new highs of US $ 700/t…..Both Companies are available at just Two Forward Multiple for Current Year as they should register an EPS of Rs 100 and Rs 50 respectively for FY 09…A stupendous first quarter points to exciting times ahead for CPC Producers….Despite a good run up already,yet looks like a clear Double from here 

We all know that SESA GOA has been sizzling for a few years now…..but this Quarter’s results show that this Iron Ore Company,now part of the Vedanta Group , which holds a 51.12% has put up a spectacular show.It’s unaudited consolidated Profit is Rs 633 crs for the three months ending June 30,2008 against just Rs 33 crs in the same quarter last year.This gives an astounding EPS of Rs 161! for just this quarter.The Equity is Rs 39.36 crs with reserves of Rs 2904 crs as on March 31,2008 rising now to cross Rs 3500 crs as on June 30,2008.Sales have surged to Rs 1324 crs in Q1 2008 from Rs 536 crs in a similar period last year…..The Sesa Group earned an EPS of Rs 392  in the whole of last year 2007/8 and paid Rs 45/share (450%) dividend…a payout of less than 12% of total profits  

Check out the results at   www.sesagoa.com/QuarterlyResults.htm 

With further significant price escalation for the current year…Chinese Steel Companies recently signed a 90+% price escalation for iron ore supplies in 2008/9….SESA GOA should perform even more spectacularly in the future

It faces risks of taxes on Exports of Iron Ore and even a rare possibility of a ban on iron ore exports to support supplies of Iron Ore for the Indigenous Steel Industry ! 

It has surged today to Rs 3300 levels after buoyancy in the market today after UPA won the trust vote yesterday in the Lok Sabha

SESA GOA has also announced at their Board Meeting on April 28,2008 a Bonus in the ratio of 1:1 and subdivision of shares into 10 shares of Face Value of Rs 1 from the current one share of Face Value of  Rs 10

The Share Price of Rs 3300 is cum bonus and cum split…Bonus hardly dents the reserves

Clearly with the Steel Sector continuing to enjoy buoyancy for the next few years as demand in India and China remains strong,the Mineral Resource Iron Ore Provider SESA GOA will continue to outperform

Clearly SESA GOA should be in your portfolio even at this price as last years EPS of 391 would easily be eclipsed and a new Record established in 2008/9

So how much should SESA GOA earn in 2008/9 ?…You’ll say “WOW” if I tell you that dont be surprised if the EPS for 2008/9 crosses Rs 800 !…before Bonus and split adjustments

My logic is simple.In Q1 2008 SESA GOA sold 3.2 million tonnes of Iron Ore at Rs 3491/MT to generate Revenues of Rs 1117 Crs and a PBT of Rs 855 crs and PAT of Rs 634 crs….For the rest of the year it will be benefit from new contract prices of over Rs 6000/MT…Assuming 65% Operating margins,SESA GOA should easily earn a PBT of over Rs 4000 crs and a PAT of over Rs 3000 crs,twice that of 2007/8. read more