Sesa Goa declined 6.08% to Rs 3332 at 15:29 IST on BSE on reports the government may ask iron ore miners to sell the iron ore to steel makers through long-term contracts instead of selling for immediate delivery to help contain inflation.
Meanwhile, the BSE Sensex was up 401.65 points, or 2.76%, to 14,979.52.
On BSE, 3.59 lakh shares were traded in the counter. The scrip had an average daily volume of 2.06 lakh shares in the past one quarter.
The stock hit a high of Rs 3560 and a low of Rs 3300 so far during the day. The stock had hit a 52-week high of Rs 4390 on 5 May 2008 and a 52-week low of Rs 1686.10 on 17 August 2007.
The mid-cap company had outperformed the market over the past one month till 4 August 2008, gaining 18.73% compared to the Sensex’s return of 8.35%. It had also outperformed the market in the past one quarter, declining 15.87% compared to Sensex’s decline of 16.09%.
The company has an equity capital of Rs 39.36 crore. Face value per share is Rs 5.
The current price of Rs 3332 discounts its Q1 June 2008 annualised EPS of Rs 655.20, by a PE multiple of 5.09.
According to reports, the Centre is considering a proposal to bring iron ore under price control in an attempt to check steel prices. In a move aimed at checking volatility in the spot market, the government is planning to make it mandatory for miners to sign long-term supply contracts with steel companies instead of selling at high spot prices.
Reports suggested that iron ore is the basic raw material for producing steel and accounts for almost 25% of the cost of steel-making. Any increase in ore prices affects the cost structure of steel companies and generally leads to higher steel prices. Higher ore prices, coupled with a 200% increase in coking coal prices are among the reasons cited by steel manufacturers to raise steel prices.
Sesa Goa reported 442.4% surge in net profit to Rs 644.72 on 180.3% increase in net sales to Rs 1273.04 crore in Q1 June 2008 over Q1 June 2007.
Sesa Goa, an iron ore mining company of the Vedanta group, has been involved in iron ore mining, beneficiation and exports besides. It is also into the manufacture of pig iron and metallurgical coke.
Courtesy: NDTVProfit
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[...] Mining companies are now using the spurt in sales to reduce stockpiles and inventories, and do not plan to increase production of ore. This year, the state faced its worst slide in demand ever. Iron ore exports, which stood at 30.05 metric tonnes (MT) in 2006-07 and 33.13 MT in 2007-08, plummeted to a mere 9.5 MT in the first six months of the present financial year. [...]