Europe gives second round of funding of € 529.53 billion or Rs. 34,94,898 Cr !!!

European Central Bank gave second 3 year discounted loans to the banks under LTRO.

LTRO stands for ‘Long-Term Refinancing Operation’ and is a monetary tool used by the European Central Bank to help pump liquidity into the banking system. The ECB offers European banks long term loans at the prevailing ECB interest-rate. The recent “LTRO” and “LTRO 2″ are 3-year loans at 1% interest rate. However, these operations have been carried out in the past with other, shorter maturies, such as 3-month loans back during the 2008 crisis. ECB offers LTRO during emergencies such as the funding crisis that hit European banks at the end of 2011. Usually when a particular bank gets into trouble and is in short of money to finance its operations, it has to go to the private market like private sector banks or financial institutions for those funds and when it cannot, due to the price to borrow is too high, or funds have pulled back from a particular bank (because of exposure to Euro-zone periphery debt) it needs to rely on funding from national central banks or from the ECB. The part of the purpose of the LTRO is to give banks a chance to participate again in the “Carry Trade” of European sovereign bonds. By being able to borrow at 3-year maturities banks can use those funds for buying shorter term government debts with higher yields. Carry Trade means borrowing in Euro € (any currency) converting them into US$ (or any currency) and route those $ into India (or any country).

European Central Bank allotted € 529.53 billion (Rs. 34,94,898 Cr) for 1,092 days under the refinancing tender were 800 banks asked for the three year loans. Since the expected range was around € 200 billion (Rs. 13,20,000 Cr) - € 1 trillion (Rs. 66,00,000 Cr), and just above the median € 500 billion (Rs. 33,00,000 Cr), this is clearly within the expectation. What is certainly scary is that the number of banks demanding a hand out was a whopping 800, well above the 523 banks from the LTRO 1 were ECB allotted € 489 billion (Rs. 32,27,400), this clearly points that many banks are capital deprived. LTRO will help out the entire country. Spanish and Italian banks, the biggest buyers in the last operation, used their holdings of their own sovereign bonds as collateral for the LTROs. This helped reduce sovereign bond yields, which were threatening to stay at unsustainable levels that would make debt repayments impossible.

Now, the ECB will collect 1 % on combined total of € 1.018 trillion (Rs. 77,88,000 Cr). It’s wished that these banks will find its way to monetize this in Carry Trade opportunities. Usually, equity markets tend to rally whenever there is any easing of liquidity directly or indirectly by the central banks. It is partly due to sentiment, and partly due to money actually flowing into risk assets like equity. Liquidity easing by central banks leads to lowering of bond yields, and also assures investors that the crisis has been averted. Besides, banks may use a chunk of the funds for 'carry trade'- as said above. At the peak of the 2007 Bull Run, many investors would borrow in yen, convert those into dollars, and then deploy the dollars in risk assets like emerging markets equities.

But LTRO should not be looked as the only solution for Europe. It will only improve the liquidity in the system, and reduce some of the problems that otherwise may have been aggravated by a liquidity problem. But it will not address the fiscal problems in weaker Euro zone economies like Greece and Portugal, among others. Most economists are of the view that Europe is headed for recession, irrespective of LTRO. 


As for our India , many experts believe that this money will not leak into emerging market. They believe that these monies is primarily to make sure that Europe doesn't have a credit crunch and stays primarily in Europe. The money flow to India will depend on India ensuring that it has friendly investment climate to attract those funds, India has to free up its economy more from deficits. Since the beginning of the 2012 the FII's have infused a total of Rs. 24,225 cr  (US$ 4 billion) into Indian stocks. In the first 17 days of the February 2012 they have infused about Rs. 13,867 cr way higher than that of the entire month of January 2012 which stood at Rs. 10,358 Cr.


Hope this time too they bring in such kind of money - the trigger they would be watching would be Budget    

VEDANTA RESTRUCTURING: Sterlite & SesaGoa to merge !!!

As per the plan, the Sterlite Industries will merge into SESA GOA, which will be form as combined entity named to be SESA STERLITE. Sterlite shares holders will be given 3 Shares of SESA GOA for every 5 Shares of Sterlite held.

Vedenta Aluminium (VAL) and Madras Aluminium will be 100 % consolidated into SESA STERLITE. Vedanta’s direct holding of 38.8 % in Cairn India will be transferred to SESA GOA, together with the associated debt of $5.9 billion (Rs. 29,500 Cr) at cost. After the transfer, SESA STERLITE will have 58.9 % shareholding in Cairn India. The new entity SESA STERLITE will be seventh largest global diversified natural resources major by Earnings Before Interest , Tax and Depreciation. According to the chairman of VEDANTA Mr. Anil Aggarwal, SESA STERLITE will be the principle operating company in the group and with its high quality assets, growth projects and strong management; it is well placed to create value for all shareholders. This merger would be cost saving of around Rs. 1,000 Cr a year.

After consolidation, Vedanta will own 58.3 % in SESA STERLITE. The group’s 79.4 % shareholding in Konkola Copper Mines will continue to be directly held by Vedanta. Post consolidation VEDANTA will own 58.3 % stake in SESA STERLITE with VEDANTA PLC’s debt service liability will reduce by 61 % from $9.65 billion (Rs.48,250 Cr) to $3.8 billion (Rs.19,000 Cr). Post consolidation SESA STERLITE will have market capitalization of $20 billion (Rs. 1 lakhs crore) and will join the elite league of resources firms like BHP Billiton, Vale and Rio Tinto. Post consolidation the new entity SESA STERLITE will have net debt of $7.38 billion (Rs.36,936 Cr) with 8 % of interest cost.  

For SESA GOA – it will issue 3 Shares for every  5 shares of Sterlite; will issue 7.2 Crores shares to VEDANTA for its 70.5 % stake in Vedanta Aluminum; will issue 7.9 crores shares to Vedanta for its 94.8 % stake in MALCO

What VEDANTA will do – It will transfer its 38.8 % stake in Cairn India to Sesa Goa along with $5.9 billion debt. However, Hindustan Zinc and Bharat Aluminum Company in which government has stake will not be a part of merger.

SESA STERLITE will be listed in India and on New York Stock Exchange as American Depository Shares (ADS).        

SESA STERLITE STRUCTURE AFTER CONSOLIDATION

YEAR ENDED DEC 2011	Rs. Crore	$ Million
REVENUE	66,431	14.23
OPERATING PROFIT (EBITDA)	24,953	5.35
GROSS DEBT	66,717	13.55
OUTSTANDING SHARES	296 Crore	----

VA TECH WABAG LTD: A VALUE PICK ; Buy at dips !!!

Scrip Code: 533269 / WABAG

CMP:  Rs. 440.25; Buy at Rs. 410 - 425 levels.
Short term Target: Rs. 450, 6 month Target – Rs. 550; STOP LOSS – Rs. 391; Market Cap: Rs. 1,164.30 cr; 52 Week High/Low: Rs. 285. / Rs. 576

Total Shares: 2,64,46,460 shares; Promoters : 81,97,915 shares –31 %; Total Public holding : 1,82,48,545 shares – 69 %; Book Value: Rs. 154.77; Face Value: Rs. 2.00; EPS: Rs. 24.25; Div: 200 % ; P/E: 18.15 times; Ind. P/E: 11.76; EV/EBITDA: 6.80.

Total Debt: ZERO; Enterprise Value: Rs. 1,100.30 Cr.

VA TECH WABAG LTD: VA Tech Wabag Limited was incorporated in 1995 and is headquartered in Chennai, India. The company was formerly known as Balcke Durr and Wabag Technologies Limited and changed its name to VA Tech Wabag Limited in April 2000. Va Tech Wabag Limited provides solutions in the water treatment industry. The company offers life cycle solutions, including conceptualization, design, engineering, procurement, supply, installation, construction, and operations and maintenance (O&M) services. The Company has four business units: Municipal Business Group, Industrial Water Business Group, International Business Group and Operation and Maintenance Business. It provides a range of engineering, procurement and construction, and operation & maintenance (O&M) solutions for sewage treatment; drinking and industrial process water treatment; effluents treatment; and sludge treatment, desalination, and reuse for institutional clients, including municipal corporations, and companies in the infrastructure sector. The company operates primarily in India, Middle East and North Africa, central and eastern Europe, China, and south East Asia. It has overseas subsidiaries in Austria, Switzerland, Germany, Czech Republic, Romania, Macao, Algeria, Tunisia, Egypt and Turkey.  It has a joint venture agreement with Zawawi Trading Company LLC in Oman. The company came with an Initial Public Offer in September 2010 with 9.5 lakhs shares at the issue price of Rs. 1310/ share raising Rs. 475 Cr. On August 2011 the company declared the sub division of shares from the face value of Rs. 5 to the face value of Rs. 2.00   

Investment Rationale: 

The global water market is estimated to be around US$ 400 billion. The water and waste-water sector continues to be an attractive investment portfolio due to various factors such as urbanization, industrialization and population explosion. The growth of the water market in the Asia Pacific region is driven by growing population densities. In the Middle East, the driver is scarcity, while massive government spending will boost the Chinese market. Sea water desalination will attract investments to augment the installed capacity from 66 million cubic metres (m3) per day to 120 million m3 per day by 2016. WABAG is a global technological leader in the entire water treatment field managed by professionals and technocrats. The company has a unique business model with strong in-house research. The company has an excellent system for efficient equipment procurement, better engineering & designs. The company also enjoys higher margin due to close monitoring and cost control. In financial terms Wabag is a zero debt company with significant cash balance of Rs 324 Cr and is constantly evaluating various opportunities for inorganic growth. The company has a diversified revenue source and more focused on high margin segments. VA Tech WABAG Ltd has an Order book of Rs. 3,530 Cr and healthy order inflow worth Rs. 900 Cr for 9MFY12, VA Tech Wabag is expected to achieve financial closure of its three BOOT framework contracts worth Rs. 530 Cr by end of 4QFY12. For 9MFY12, VTW has reported consolidated revenues of Rs. 770 Cr and expects to book 40 % - 50 % of its annual revenue for FY12 in 4QFY12, mainly due to higher revenue booking from the Dambulla (Srilanka) project in which 15 % of the jobs are already completed, but no revenues have been booked as yet. Key projects which would be revenue contributors are Chennai Desalination project would contribute around Rs. 45.80 Cr to the revenue; A total water management project from IOCL Paradip will contribute around Rs. 35.79 Cr; Project from Delhi JAL Board to contribute Rs. 11.58 Cr; Projects from ESSAR Group will contribute around Rs. 11.41 Cr; A project from Majjis, Oman to give Rs. 9.6 Cr and Projects from Tehran and Shiraz to contribute Rs. 26 Cr and Rs. 25 Cr respectively.  

Outlook and Valuation:

With a strong Order book & an order inflow for Q3FY12, the management remains confident of achieving a closing order book of around Rs. 4,000 Cr for next year. 3 BOOT Orders worth Rs. 530 Cr from Aurangabad, Ulhasnagar & Namibia have already moved from framework to firm order book on its financial closure. Further, more repeated orders worth Rs. 300 Cr are expected from the oil, gas & steel sector & an international framework order worth Rs. 200 Cr is expected to get booked in Q4FY12.While order inflow in past 9M has remained subdued from the municipal sector, the new JNNURM scheme planned by the government and other state/central projects is expected to boost investments from the municipal segment. The company have seen revenue de-growth of around 7 % for Q3FY12, on account of of delays in revenue recognition from the Sri Lankan project and a high base yoy execution of Libya project in 3QFY11. The Chennai Desal project & the Srilankan project are expected to contribute majorly, which will help VTW to achieve its growth guidance of close to Rs. 1400 Cr- Rs. 1500 Cr. Company's Operating margins were at 7.14 % due to the impacted of rupee depreciation combined with lower pace of execution in a few projects. With normalcy expected in the Libyan continent & revival in execution as well as revenue bookings in Q4FY12, VTW is poised to show strong growth going ahead. At its CMP of Rs. 440.25, the stock trades at 12.57 x FY13E earnings. The company can post Earnings per share (EPS) of Rs. 35 in FY13E and Rs. 42.80 in FY14E. One can buy VA TECH EABAG Ltd with a target price of Rs. 450.00 for Medium to Long term investment.

KEY FINANCIALS	FY11	FY12E	FY13E	FY14E
SALES (Rs. Crs)	1,233.00	1,428.80	1,668.60	1,952.70
NET PROFIT (Rs. Crs)	51.80	68.00	92.40	113.10
EPS (Rs.)	19.60	25.80	35.00	42.80
PE (x)	21.30	16.20	11.90	9.80
P/BV (x)	1.93	1.76	1.55	1.37
EV/EBITDA (x)	6.80	6.00	4.60	3.50
ROE (%)	9.10	10.90	13.10	14.00
ROCE (%)	15.00	16.40	17.40	18.40

I would buy VA TECH WABAG Ltd with a price target of Rs. 450 for Medium to Long term. As I always say, I am a long term believer in markets & I do respect the markets and will keep a strict stop loss of 8 % or Rs. 391.00 on every purchase.

MCX (Multi Commodity Exchange) : IPO SUBSCRIBE !!!

Price Band: Rs. 860 - Rs. 1032, Face Value: Rs.10.

Minimum Lot Size: 6 Shares.

Issue opens on: 22nd February 2012, Wednesday.

Issue closes on: 24th February 2012, Friday.

Listing on: 9th March 2012.

Total No. of Shares offered: 64,27,378 shares or 12.60 %

Employee Reservation: 2,50,000 shares.

Net Public Offer: 61,77,378 shares.

QIB Book: 3,088,689 shares.

Non – Institutional Bidders: 9,26,607 shares.

Retail Book: 21,62,082 shares.

Equity Shares outstanding prior Issue: 5,09,98,369 shares.

Equity Shares outstanding post Issue: 5,09,98,369 shares.

Total Size of the Issue: Rs. 552.75 Crs - Rs. 663.30 Crs.

IPO GRADING: 5/5 - CRISIL – Strong Fundamentals.
FAIR VALUE RANGE - Rs. 1200 - Rs. 1400.

KEY FINANCIALS (Consolidated)	31 Mar 2010	31 Mar 2011	31 Dec 2011
Total Income (Rs. in Cr)	493.70	447.56	474.50
Net Profit (Rs. in Cr)	220.80	176.27	217.95
Net Profit margin (%)	35.70	39.40	47.00
EPS (Rs.)	43.29	34.56	42.74
Net Asset Value (Rs.)	136.63	166.45	210.58
Return on Equity (%)	21.40	22.80	32.20
Return on Capital Employed (%)	31.30	31.80	45.10

MULTI COMMODITY EXCHANGE OF INDIA LIMITED : MCX Stock Exchange Limited was originally incorporated as a private limited company on April 19, 2002 as Multi Commodity Exchange of India Private Limited and subsequently converted into public limited company on May 16, 2002 in 2008 and is based in Mumbai, India. MCX Stock Exchange Limited provides a trading platform in currency derivatives in India. The company offers trading in currency futures contracts in four currencies consisting of the U.S. Dollar-Indian Rupee (USDINR), Euro-Indian Rupee (EURINR), Pound Sterling-Indian Rupee (GBPINR), and Japanese Yen-Indian Rupee (JPYINR). The company, through its subsidiary, MCX-SX Clearing Corporation Limited, offers clearing and settlement services in multi asset classes.  MCX enjoys the leadership position in the commodity futures industry, the market shares in terms of total value of commodities futures contracts traded on MCX in Fiscal 2011 was 82.4 % of the Indian commodity futures industry. There are over 30 commodity futures and options exchanges worldwide that trade commodities ranging from energy, metals, agriculture to livestock in many countries including the United States, China, Japan, Malaysia and the United Kingdom. In 2011, MCX stood at 5^th place among the global commodity bourses in terms of futures contracts traded, during the period between January and June 2011 about 127.8 million futures contract were traded on MCX. MCX ranks no.1 in silver, no.2 in natural gas, no.3 in crude oil and gold futures trading. The company reaches out to about 800 cities and towns in India with the help of about 1,26,000 trading terminals. MCX COMDEX was the first and only composite commodity futures price index. MCX has main competitor is National Commodity & Derivative Exchange Ltd (NCDEX) – Mumbai; National Multi Commodity Exchange Ltd  (NMCEX)- Ahmedabad; Indian Commodity Exchange Ltd (ICEX) – Gurgaon; Ace Derivates and Commodity Exchange (ACE) – Ahmedabad.

MCX holds 5 % in Dubai Gold and Commodity Exchange and the book value of this investment was Rs. 2.185 Cr as of December 31, 2011; 100 % in MCX Clearing Corporation Ltd; 5 % in MCX SX; 26 % in MCX-SX Clearing Corporation Ltd; 51 % in SME Exchange of India Ltd with initial investment of Rs. 5,10,000

MCX derives its income primarily from transaction fees with respect to the trades executed on MCX Exchange, annual subscription fees, member admission fees, terminal charges, proceeds of sale and dividends from investments and interest from bank deposits. Commodities play an important role in India‘s economy. India has over 7,000 regulated agricultural markets, or mandis, and the majority of the nation‘s agricultural production is consumed domestically, according to the Agricultural Marketing Information Network. India is the world‘s leading producer of several agricultural commodities. The agriculture sector accounted for approximately 14.2 % of India‘s gross domestic product (GDP) at a constant price (2004-05) for the fiscal 2011. India‘s GDP at current market prices for the fiscal 2011 was estimated to be Rs. 78,779.47 billion (Source: Economic Survey 2010-11). There are currently 21 commodity exchanges recognised by FMC in India offering trading in over 60 commodity futures with the approval of FMC. In the fiscals 2009, 2010 and 2011, the total value of commodities traded on commodity futures exchanges in India was Rs. 52,489.57 billion, Rs. 77,647.54 billion and Rs. 119,489.42 billion, respectively. The total value of commodities traded on commodity futures exchanges in India for the first nine months ended December 31, 2011 was Rs. 137,228.55 billion.  

Out of the Offer of a total of 64,27,378 Equity Shares, 26,43,916 Equity Shares are being offered by FTIL, 21,12,025 Equity Shares are being offered by SBI (Equity), 7,81,508 Equity Shares are being offered by GLG, 3,90,754 Equity Shares are being offered by Alexandra, 2,46,175 Equity Shares are being offered by Corporation Bank, 1,48,000 Equity Shares are being offered by ICICI Lombard and 1,05,000 Equity Shares are being offered by Bank of Baroda. The Equity Shares being offered by the Selling Shareholders under the Offer have been held by such Selling Shareholders for a period of more than one year prior to filing of the Draft Red Herring Prospectus with SEBI.

Comparisons with Industry as on 31st March 2011

Exchange	Currency	Share Price	Shares O/S (mn)	Market Cap (mnUS$)	EPS Estimate FY13	P/E FY13e	EV/Sales FY13e	EV/EBITDA FY13e
CME	US$	291	67	19295	17.90	16.20	0.90	8.50
ICE	US$	133	73	9644	8.00	16.50	2.30	8.80
MCX	INR	1032	51	1053*	NA	NA	NA	NA

*1US$=Rs.50

According to me one should definitely look for subscribing Multi Commodity Exchange India Ltd IPO as it will be the first listed exchange on Indian bourses taking the country at par with other markets like US, UK, Japan, Australia, Singapore & Hong Kong. Globally , Exchanges trends to trade at average of 5 times their book value and 18 - 20 times their earnings. Long term investors should look into subscribing the IPO for good opportunity. Short term investor can subscribe for listing gains.

SESA GOA LTD : Getting out from storm !!!

Scrip Code: 500295 / SESAGOA

CMP:  Rs. 234.90; Buy at current levels.
Short term Target: Rs. 270, 6 month Target – Rs. 350; STOP LOSS – Rs. 216.10; Market Cap: Rs. 20,415.19 cr; 52 Week High/Low: Rs. 333.40 / Rs. 148.30

Total Shares: 86,91,01,423 shares; Promoters : 47,91,13,619 shares –55.13 %; Total Public holding : 38,99,87,804 shares – 44.87 %; Book Value: Rs. 133.34; Face Value: Rs. 1.00; EPS: Rs. 25.80; Div: 350.00 % ; P/E: 9.10 times; Ind. P/E: 19.44; EV/EBITDA: 4.70.

Total Debt: 1015.97 Cr; Enterprise Value: Rs. 22,127.32 Cr.

SESA GOA LTD:  SESA GOA Ltd was incorporated in 1954 and is based in Panji, Goa, India. SESAGOA is engaged in exploration, mining and processing of iron-ore. The Company operates in three business segments namely iron ore, metallurgical coke and pig iron. The pig iron business focuses on the domestic Indian market, especially to foundries and steel mills in western and southern India. It also exports to the Middle-East and South East Asia. SESA GOA is India's largest producer & exporter of iron ore in the private sector which currently accounts for 1.5 % of world trade in iron ore & is amongst lowest cost iron ore mining company in the world. Its mines are mainly located in the Goa, Karnataka & Orissa. It exported approx. 5 mn tons of iron ore, fines and lumps to Japan, China, Europe.  It also has mining interests in Western Cluster Iron Ore project, Liberia. The company sells its iron ore primarily in China, Japan, Korea, India, and Europe. In April 2007, Anil Agarwal – Vedanta Resources acquired a controlling stake of 51 % in Sesa Goa from Mitsui & Co, Japan, for US$ 981 million. SESAGOA owns or have the rights of reserves & resources consisting of 306 million tonnes of iron ore. In April 2011, the Company acquired 10.4 % stake in Cairn India Ltd (CIL) from Petronas International Corporation Ltd (Petronas). In March 2011, Sesa Goa acquired the assets of steel plant unit of Bellary Steel and Alloys Limited (BSAL). SESA GOA is compared with NMDC Limited, Godawari Power & Ispat Limited in India and with Ferrexpo Plc globally.

Investment Rationale:

Iron ore prices have recently fell sharply from US$180/ tonne and now are recovering to US$145/ tonne. Also Iron ore imports earlier dipped in China due to fall in steel production till November, 2011; however, imports again rebounded in December 2011 supported by higher steel production which boosts the prices. The exports from India continued to remain lower. Inventory of iron ore at Chinese ports have been steady at 95 mt. During the quarter 0.64 mt of iron ore was sold from Karnataka through e-auction. Sesa Goa expects that the Karnataka issue to get resolved by Q4FY12 and to contribute about 6 mt in FY13 taking overall volumes to around 20 mt. The Shah Commission continues its verification in Goa and report is expected by March 2012. Goan ores being Haematite in nature is not suitable for pelletization which may cost SESA by little bit. Also the Western Cluster (Liberia project) is on track with encouraging R&R findings the first shipment is expected in FY14 which will bost Sesa Goa’s revenue substantially. Also SESAGOA’s total debt including forex debt constitutes of US$ 400 mn (FCCB of US$ 215 mn) which is low as compared to its industry peers which gives one a comfort to invest in the stock. There are some likely events due in FY13, which could have significant bearing on the company’s operational performance in FY13, Such as If the Supreme Court lifts ban on mining in Karnataka and SESAGOA is allowed to restart mining activities in Karnataka would boost FY13 sales volume tremendously which is POSITIVE for Sesa – the Supreme Court hearing is due by Q4FY12; Under the National Mineral policy the royalty rates are revised once in every 3 years and this time it is due in August 2012, and considering the recent regulatory environment it is highly possible that there may be a rate hike as the rate revision which is exected that it will not impact much negatively for Sesa Goa. Of course there could be 12 % negative impact in FY13 EPS of Sesa if the MMDR bill is passed in its same form and fashion, which is expected to be tabled in Budget session of the Parliament, which will be from March 14 to March 17^th 2012. But I believe that the markets have already factored in these negatives in the stock prices. Also the Carin will contribute upto 20 % in the bottom line as profit from associates. On SOTP basis the valuation of the iron ore business comes at Rs. 87/share which is 3.5 x the FY13E EV/EBITDA and is in discount to upto 15 % from its global peers. The stake in CAIRN INDIA is been valued at 30 % discount to current market cap which comes to Rs. 107/share. Taking this into consideration the target price of SESAGOA comes at Rs. 250           

Outlook and Valuation:

The Ministry of Commerce has hiked export duty on iron ore from 20 % to 30 % for both lumps and fines. Sesa Goa exports close to 90 % of its total sales, and hence an export duty hike could lead to EBITDA estimates coming down by close to 20 % in FY13F-FY14F and earnings estimates coming down by close to 25 %. Indian exports of iron ore have come down by 40 % - 45 % during the past two years on account of earlier export duty hike of 20 % from 10 % and an also by export ban/mining ban in Karnataka. With such restrictions on transportation of ore in Goa, the local state Goa government has also suffered. All these factors together resulted in significant downturn in iron ore exports from India. It is believed that the above increase in export duty won’t impact exports significantly as - firstly the majority of iron ore being exported is from Goa, which produces low-grade iron ore and doesn’t have major demand in India. At the same time, transportation of ore from Goa will be very costly for domestic steelmakers due to logistic issues; and secondly even after export duty hike, companies such as Sesa Goa will have a decent margin (25- 30 %) and hence exports should continue. At the current market price of Rs. 234.00, the stock is trading at a PE of 5.20 x FY12E and 4.25 x FY13E respectively. The company can post Earnings per share (EPS) of Rs. 27.10 in FY12E and Rs. 42.60 in FY13E. One can buy SESA GOA Ltd with a target price of Rs. 250.00 for Medium to Long term investment.

KEY FINANCIALS	FY10	FY11	FY12E	FY13E
SALES (Rs. Crs)	5,858.30	9,205.10	7,776.10	8,462.10
NET PROFIT (Rs. Crs)	2,629.10	4,209.10	2,351.10	3,706.00
EPS (Rs.)	31.60	48.40	27.10	42.60
PE (x)	6.40	4.20	7.40	4.70
P/BV (x)	2.10	1.40	1.20	1.00
EV/EBITDA (x)	5.20	3.40	7.40	7.10
ROE (%)	41.60	40.60	17.00	22.30
ROCE (%)	47.20	47.00	18.50	14.80

I would buy SESAGOA Ltd with a price target of Rs. 350 for Medium to Long term. As I always say, I am a long term believer in markets & I do respect the markets and will keep a strict stop loss of 8 % or Rs. 216.10 on every purchase.

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