Stock Idea - Sesa Goa.

Scrip: - Sesa Goa Ltd.
BSE Code: - 500295
CMP: - 116
Market Cap: - 4601
Target : - 145 (2-3 months)

Commodities are bottoming out and showing signs of uptrend.
Company has a good management and has shown good results in the pasts.
It has now fallen more than 50% from its peak and is even trading at a discount to the price Vedanta paid last year to acquire the company from Mitsui.
At that time: (i) iron ore prices were half that of the present levels; (ii) sales volumes were considerably lower, (iii) cash levels were also much lower; and (iv) other competitors had shied away from bidding due to imposition of Rs 300/tonne export duty on iron ore just before the process. Several factors have collectively led to this fall.

The key negatives are: (i) seasonal weakness; (ii) lower import demand from China, given curtailed steel production due to Olympics and Paralympics; (iii) global commodities sell-off as financial institutions pull out funds to enhance liquidity amidst the global financial crisis; and (iv) higher coke prices in China causing weakness in low-grade iron ore prices. However, these negatives are fading away and this will result in a dramatic shift in sentiment, going forward.

Sukhani says on this scrip "Sesa Goa is a part of the commodity play and it’s an excellent stock to own and to trade in. There is a sense that at least for investors, they have a lot of support below current prices around Rs 100, its little low but for an investor this is a good time to go and get invested in the stock. For a trader there is overhead resistance, so take Rs 10-15 chance for an upside, its worth buying for both traders and investors."

Happy Investing.
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