Result Update: Sesa Goa (Q1 FY12) – Market Performer
CMP Rs278, Target Rs302, Upside 8.6%
± Topline of Rs21.1bn was below our estimate of Rs28bn and also declined 12.6% on a yoy basis
± The underperformance in topline was due to both lower than expected iron ore realization and volumes
± Iron ore sales volume of 4.3mn tons was lower than our estimate of 4.7mn tons on account of logistical bottlenecks in Goa
± Net realizations too declined 14.4% qoq to Rs4,502/ton due to higher sales in domestic market
± EBIT/ton on iron sales declined to Rs2,513/ton from Rs3,041/ton in Q4 FY11 and Rs3,009/ton in Q1 FY11
± Pig iron production declined due to unavailability of high grade iron ore in Karnataka
± Volume headwinds coupled with higher export duty and transportation costs to keep stock under pressure; maintain Market Performer
