SESAGOA : BUY ON EVERY DECLINES

Scrip Code : 500295 /SESAGOA

CMP : Rs. 367.10 ;Buy at current levels & in every dip.

Traget : Rs. 380 - Short term ; Long term - Rs. 480.

Market Cap : Rs. 31,559.68 cr.

52 Week High - Low : Rs. 274.7/Rs. 490.8.

Book Value : Rs. 86.75 ; Face Value : Rs. 1.00 ; EPS : Rs. 31.83 ; Divd : 325.00 % ; Total Debt : Rs. 1992.80 cr ; Enterprise Value : Rs.397.59 per share ;

Total Shares : 859702559 shares; Promoters - 479113619 shares - 55.73% ;Total Public holding – 99510958 shares – 11.58%

SESA GOA is a best bet in medium to long term at current price as company is rapidly churning free cash flows on the very fluctuating iron ore prices. There’s an estimate of 3.4 cr tonnes of iron ore mining in FY12, which is much lower estimate then management’s guidance of 5 cr tonnes which implies a volume of 31% CAGR in FY10-12. This volume upside would make cash flow rising despite of falling commodity prices.

On the basis of Discounted Cash Flow analysis Sesa Goa current valuation in an long term iron ore realization comes at $47/tonne.

Now, on CAIRN VEDANTA DEAL, This acquisition will cost over US $ 9 Billion of which Sesa Goa will invest from its cash resources US $ 3 Billion for a 20% stake…. This will be shown as an Investment in the Books of Sesa Goa. (20% of cairn comes to 37.95 cr shares at Rs.355/sh i.e. Rs.13471 cr).

Now, on 31st March 2010

Networth of Sesa Goa was Rs.7209 cr. (Eq Rs.83 cr + Reserves Rs.7126 cr).

Fixed Asset Rs. 580 cr

+ Investments Rs. 5479 cr

+ Net Current Asset Rs. 3076 cr

– Loans Rs. 1926 cr

TOTALS – Rs.7209 cr.

The Deal is expected to be done by early Fy 2011

So after the deal on March 31, 2011 , Sesa Goa’s Networth has to climb from Rs 7209 crs to atleast Rs 15000 cr. The Assets Side would reflect Fixed Assets of Rs 600 crs + Investments of Rs 13500 crs atleast + Net Current Assets of Rs 1000 crs .Sesa Goa will hold 37.95 crs shares being 20% of Cairns India’s Equity…. thus will receive Rs 190 crs as Dividend assuming Rs 5/share Dividend by Cairns…. It has Invested atleast @ Rs 13500 cr, so the return on Investment is a 1.40% being the Dividend Yeild!….

The book value of Sesa Goa will be around Rs.174.50. EPS- Rs. 88-90. EV/EBITDA - 11.35 v/s 26.40 of industry

MICRO-MAX MOBILE: PLANS IPO !!!

MicroMax Informatics Ltd - India's one of the leading mobile handset maker is planning for an IPO. Company intends to sale 2,15,46,118 shares through IPO. The price could be around Rs. 210 per share, an total of Rs. 452 cr to be raised by diluting 10.03 % of post issue. This values the company around Rs. 4500 cr. Equity Prior Issue - 19,32,70,610 shares ; Post Issue - 21,48,16,728 shares.

3 PE investors have already bought a 5.75 % stake in pre ipo for Rs. 210 cr from 4 promoters this Sept 2010. Sequia Capital has - 2.68 %; Sandstone Capital - 2.68 %; Madison India Capital - 0.39 % bought from Rajesh Agarwal, Rahul Sharma, Sumeet Kumar & Vikas Jain for an estimate price of Rs. 181 cr.(After accounting for Bonus shares) rest unknown. TA Associates a major PE investor has 15 % stake bought in DEC 09 at around Rs. 100 cr. Total PE investment in company is around Rs. 410 cr, whereas the promoters actual contribution is Rs. 6 lakh per head. Indian handset makers market share went up to 17.5 % from merly 0.9 % last year. MicroMax enjoys 4.1 % of market share followed by Spice - 3.9 %, Karbonn mobiles - 3 %, Nokia - 54.1 %, Samsung -9.7 %. MicroMax mobiles sold 70.5 lakh handset by March 2010, it also sells mobile data cards.

Financial Details -

Net Worth as on 31 March 2010 - Rs. 208.624 cr ;

Net Asset Value - Rs. 11.75/sh.

Total Income - Rs. 1601 cr ; Net Profit - Rs. 200 cr (March 2010).

Revenue have jumped 4.5 x against last year & net profit grew to 5.7 x from last year. The reason of high margins in bussiness is due to wafer thin overhead with cost of product sold comprising 2/3rd of total sales.

Company's Employee cost is around Rs. 7 cr. Selling & distributing Expenses Rs. 75 cr. On the basis of last fiscal profit on a post issue- EPS- Rs. 9.3 ; P/E - 22.5 .

FUTURE PLANS -

Company is looking at valuation of 13.3x its previous years EBITDA. Company wants to use half of the proceeds amounting to Rs. 226 cr in setting up new handset manufacturing plant near TamilNadu. The rest of the amount Rs. 125 cr in BRAND buliding for next 2 years (April'11 - March'13). Investment in acquisition Rs.75 cr by March'11. Rest Rs. 26 cr in strategic initiatives to be used by current year March'11.

Company had expanded bussiness in international market, It intends to expand in Nepal by January, SriLanka by June, Bangladesh by July. Also it intends to expand its wings to Nigeria, Ghana & UAE.

Orissa Minerals Development Company Ltd : OMDC

Scrip Name: Orissa Minerals Development Company Ltd
BSE CODE - 590086
NSE CODE - ORISSAMINE
CMP: Rs.33775.75;
Buy at Current levels
Market Cap : Rs.2026.545 cr ; Free Float M.cap : 1013 cr
52 Week High/Low : Rs.44693.80(26Aug10)/Rs.20475(4Aug10)
Total Shares : 6,00,000 shares;
Promoters - 3,00,089 shares - 50.01%
Book Value : Rs.13194 ; Face Value - Rs.10; EPS - Rs.228.76;
Public Holding - 299911 shares - 49.99%
Enterprise Value : Rs.33775.75 per share.
Book Cls - 21-SEP-2010 ; Rec Dt - 28-SEP-2010

OMDC was incorporated in 1918, was trading on Calcutta Stock Exchange. An government owned company with promoters holding of 99.18 % as on 31 March 2010. Rashtriya Ispat Nigam Ltd, Union Govt along with state owned holding Co. owns 51% of OMDC as on 31 March 2010.

OMDC has 6 iron ore mines with combine reserve of 200 million tonnes around Rs.7000 cr. In 2009 it mined 1.66 mt of ore & posted profit of Rs.182 cr on trunover of Rs.347 cr, cash per share of Rs.13200 at Rs.792 cr.

OMDC got listed on BSE ON 4 AUG 2010, with the paid up capital of Rs. 60 Lakhs. A ZERO DEBT company.

Total Shares o/s - 6,00,000 shares.

Indian Promoter - 3,00,089 - 50.02%.

Banks/Fin.Inst/Insur. - 94500 - 15.75%.

Pvt Corporates Bodies - 36391 - 6.07%.

NRI/Foreign - 1757 - 0.29%.

General Public - 167263 - 27.88% .

Financials -
As on June 2010- (MAR 2010)
Sales - Rs.19.49 cr,(18.06)
PAT - Rs.13.72 cr,(14.81)
EPS - Rs.228.76,(246.77)
R & S - Rs.791.64 cr,(791.66)
RONW - 24.84%.


WHATS THE BUZZzzzzz.....

There are the buzz in the market that OMDC will declare Bonus & split in order to get it self listed on NSE which needs minimum paid up capital of Rs. 10 cr for listing. Its already listed on BSE which needs Rs.3 cr as min. paid up capital, this listing is done as per the alliance between BSE & CSE.

The Public holding more than 1 % are - ALLBANK FINANCE LTD - 6600 shs 1.10% ; 3 A CAPITAL SERVICES - 6738 shs 1.12% ; Asphi H Tangree - 7600 shs 1.27% ; Mahendra Giridharilal - 9198 shs 1.53% ; LIC - 92500 shs 15.42%. TOTALS - 122636 - 20.44 %

AS ALWAYS I RECOMMEND THIS WITH STRICT VERY STRICT STOPLOSS, IN ORDER TO SAVE YOUR CAPITAL......

Country "PEG" Ratio

The PEG ratio (Price to Earnings divided by Growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company's expected growth. In general, the P/E ratio is higher for a company with a higher growth rate. Thus using just the P/E ratio would make high-growth companies overvalued relative to others. It is assumed that by dividing the P/E ratio by the earnings growth rate, the resulting ratio is better for comparing companies with different growth rates.

The PEG ratio is used for individual stocks as a valuation measure that factors in growth rates. It is calculated by dividing the company's P/E ratio by its growth rate. Many investors would rather own a company with a high P/E ratio and an even higher growth rate than a company with a low P/E ratio and an even lower growth rate. A PEG ratio of one or less is typically viewed positively.

The PEG ratio is considered to be a convenient approximation. It was popularized by Peter Lynch, who wrote in "One Up on Wall Street" that "The P/E ratio of any company that's fairly priced will equal its growth rate", i.e. a fairly valued company will have its PEG equal to 1.

If we decide to apply the PEG ratio to various countries by dividing estimated GDP growth into the P/E ratio of the country's main stock market index. Many developed countries have low P/E ratios, but they also have low GDP growth, while developing countries may have higher market valuations as well as stronger GDP growth. Investors may find PEG ratios more useful than simple P/E ratios when determining asset allocations for various countries.

Below are the PEG ratios for 22 countries around the world. For each country, we will use the trailing 12-month P/E ratio for the index shown as well as estimated 2010 GDP growth. As shown, Russia and China have the lowest country PEG ratios at 1.86 and 1.90, respectively. Russia has a very low P/E at 8 and decent estimated GDP growth at 4.3%. China, on the other hand, has a rather high P/E ratio at 19.24, but its GDP growth is also very high at 10.10%. The US is right in the middle of the pack with a PEG of 5.07. Mexico rank just above the US with a PEG of 3.85, while Canada ranks just below the US at 5.67.

The US does have the best PEG ratio in the G-7, so US investors looking for developed country exposure might be better offer staying right at home. European countries have exceptionally high PEG ratios because of their mediocre valuations and low growth rates. Australia and Spain both have negative PEGs -- Australia because it has a negative P/E and Spain because it has negative GDP growth.

RELIANCE TREASURY STOCK SALES : BUZZZ....

RELIANCE INDUSTRIES

Scrip Name: RELIANCE INDUSTRIES

CMP: Rs.990;

Buy at Rs.950-1000 levels

Traget : Rs. 1130

Market Cap : Rs.318046 cr

52 Week High/Low : Rs.1129/Rs.910.30

Total Shares : 3270714336 shares; Promoters - 1463923343 shares - 44.74%

Book Value : Rs.392.41 ; Face Value - Rs.10; EPS - Rs.53.26;

P/E – 18.56; DIV (%)- 70%

Enterprise Value : Rs.1163.60 per share ; EV/EBITDA – 11.52;

There are the talks of Reliance selling its treasury shares worth Rs.3400 crs. About 4crs of treasury shares.Here are some of its past deals and the at present position of its treasury stocks..

DETAILS OF TRANSACTION

SEP 17 2009 – 1.50 cr shares @Rs.2125 = Rs.3188 cr in value a 0.91% of Stake.

(RIL bought at Rs.158 in year 2002)

JAN 04 2010 – 2.58 cr shares @Rs.1035 = Rs.2675 cr in value a 0.79% of Stake.

JAN 11 2010 – 3.30 cr shares @Rs.1050 = Rs.3465 cr in value a 1.00% of Stake.

A total of 7.38 cr shares @ Rs.9328 cr on an average of Rs.1263.95/share.

NAME OF SHAREHOLDER/SUBSIDIARY HOLDING RIL SHARES.

Reliance Universal Enterprise holding 5.69 cr shares (1.73%).

Reliance Polyelefins holding 6.12 cr shares (1.86%).

Reliance Chemicals holding 6.22 cr shares (1.89%).

Others holding 80 lakhs shares (.25%).

A total of 18.84 cr shares (5.73%). This also includes 12.05 cr shares or 3.67% held by Petroleum Trust.

At present RELIANCE has 30.89 cr shares (9.4%) of treasury stock including RIL shares held by its Subsidiary firms named above.NOW, at Current Market Price of Rs.1000 RIL’s Treasury stock are worth Rs.30,089 cr.