Saturday, November 3, 2012

Buy Sesa Goa in the range of 165 - 175

The recent announcement of iron ore mining ban being lifted selectively in Karnataka has triggered this buy call by InvestorZclub. It seems that all the negatives are priced in the stock of Sesa Goa, India largest iron ore mining company which derives 80% of it's ores from Goa.

Now the selective removal of mining ban will augur well for the stocks like Sesa Goa, as the news flow for the sector as a whole can only get better from here and couple of months down the line the mining ban in Goa will also be removed.

Since the Iron ore mining ban was imposed on Goa based mines, the stock hadn't fallen below 150 levels and is hovering around 170 since past couple of months. This suggest that the down side in the stock is limited and there is good upside once the mining ban is removed in Goa.

Valuation wise the stock is attractively priced considering the capacity and captive mines in India and abroad. At 15,000 crores market cap, the stock is very attractively priced considering the debt free balance sheet of the company. On top of that 20% of it's stake in Cairn India is valued at 12,500 crores, which makes the company being valued at just 2500 crores. Though the stake in Cairn India is not for sale but still it's an asset of huge size which will help it get extra cash flow in the form of dividend from Cairn India.

Considering all these factors the stock has the potential to double from current levels of 170 in couple of years time.


  1. Sesa Goa has come down to 169 levels. One can accumulate stocks on dips as the resolution regarding mining in Goa is expected to come by Nov end or mid of December.

  2. The stock rallied to around 200 levels in December, an appreciation of around 15% in 1.5 months.


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