The Hindu Business Line : Rail budget improves sentiment for Sesa Goa

THE railway freight status quo has improved the sentiment for all the commodity stocks today including that of Sesa Goa, which is one of the important iron ore fines and lumps exporters to China, Japan and European steel makers. It is the largest private exporter of iron ore, which has mines in Karnataka, Goa and Orissa and exports mainly through Murmagaon port.

"Today's upward move is largely due to readjustment in valuation for not happening of an event that was already discounted," said commodity stock analyst with an institutional brokerage.

Mr Ketan Thacker of Anagram Stockbroking pointed out that the Sesa Goa stock, however, witnessed a surge last week over return of Chinese buying in the ore market.

The spot prices started rising in the later part of June after a dip in May. The global commodity prices eased in May when it became evident that China was trying to tame its consumption of metals. During 2003-04, the Chinese iron ore imports saw Indian exporters' margin jump. Indian players also benefited from Brazilian exporters who were priced out because of higher freight charges, Mr Thacker said.

According to commodity experts, Sesa Goa, which also exports coking coal though Sesa Kambla Coke, a subsidiary, benefited from its international price rise during the past one year. The Mitsui (of Japan) controlled company, has recommended 100 per cent total dividend for 2003-04.

The recent agreement of its two subsidiaries with Videocon International for setting up a power plant in Goa on BOO basis using blast furnace gas of pig iron plant of one of the subsidiaries and waste heat of the other one's metcoke plant. This 30 mw power plant will augment the earnings of the two subsidiaries after commissioning, three years down the line and would in turn improve the bottom line of Sesa Goa directly.

The Sesa Goa stock today moved up by over 8 per cent at Rs 392.55 and clocked traded volumes of 3.06 shares on the BSE and 8.8 lakh shares on the NSE. The delivery figures, however, suggested little investment buying and more of day trading activity.