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Deeptha Rajkumar

RIDING piggyback on the recent firmness in iron ore prices, the stock of Sesa Goa has been witnessing sustained momentum on the bourses.

In fact, the stock has appreciated significantly from a low of Rs 59.05 on the Bombay Stock Exchange in March to its current levels of Rs 485 on the bourses.

Brokers attribute the sharp rise in prices to the fact that it is by and large an illiquid counter. "And given the fund interest in the counter, sustained buying support on any given day will push up prices,'' a broker said.

On their part, analysts maintain that prospects of a further strengthening in iron ore prices will continue to sustain interest in the counter.

"One plausible reason could be that with prices firming up, there is expectation of a hefty increase in prices when the contract comes up for re-negotiation in financial year 2004,'' Mr Arun Kejriwal of KRIS said.

Sesa Goa, the flagship company of the Sesa Group, is the country's largest private sector exporter of iron ore.

Sources said the company is looking to sell almost eight million tonnes next year and is also holding discussions to expand its capacity over the next two years.

"The company has seen good offtake primarily due to the Chinese and Japanese demand. And with new capacity build-up in China, the company's future exports to China continue to look good for the next one year,'' an analyst said.

India's demographic advantage with China is also said to be one reason for Sesa Goa sourcing huge amounts of iron ore from the country.

However, while Chinese demand is expected to sustain volumes and prices, there are concerns about the company's logistics.

Apart from this, there is a growing perception that at these levels the stock is over priced. The stock closed at around Rs 485.85, up 8.59 per cent, with around 2.26 lakh shares traded on the BSE.

On the NSE, the stock ended the day at Rs 485.35, up 8.17 per cent, with around 3.92 lakh shares traded.

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