Sesa Goa (Q1 FY13)

India Infoline News Service | Mumbai |

Iron ore sales volume of 2.9mn tons was lower by 32.6% yoy. The decline in volume was due to mining ban in Karnataka and logistical bottlenecks in Goa.

CMP Rs183, Target Rs202, Upside 10.2%

  • Topline of Rs17.3bn was lower than our estimate of Rs19.3bn and declined 17.8% yoy on account of lower iron ore volumes
  • Iron ore sales volume of 2.9mn tons was lower by 32.6% yoy. The decline in volume was due to mining ban in Karnataka and logistical bottlenecks in Goa. A restriction on transportation of iron ore in South-Goa from mid-June led to lower volumes from Goa.
  • Net realizations increased 8.2% qoq to Rs5,408/ton due to higher sales in export market and a sharp depreciation of the Rupee
  • EBIT/ton on iron ore declined to Rs1,659/ton from Rs1,822/ton in Q4 FY12 and Rs2,513/ton in Q1 FY12 due to higher export duty
  • CEC gave its concurrence for a provisional production capacity of 2.29mtpa in Karnataka
  • Volume headwinds coupled with higher export duty and transportation costs to keep stock under pressure

Result table

(Rs mn) Q1 FY13 Q1 FY12 % yoy Q4 FY12 % qoq
Net sales 17,326 21,089 (17.8) 27,944 (38.0)
RM purch and stores (2,933) (1,684) 74.1 (3,477) (15.6)
Transportations costs (1,730) (2,088) (17.1) (2,683) (35.5)
Export duty (4,338) (3,454) 25.6 (7,422) (41.5)
Personnel costs (693) (545) 27.1 (876) (20.9)
Other overheads (870) (1,528) (43.1) (1,808) (51.9)
Operating profit 6,762 11,789 (42.6) 11,678 (42.1)
OPM (%) 39.0 55.9 (1,688) bps 41.8 (276) bps
Depreciation (303) (269) 12.6 (286) 5.9
Interest (1,178) (613) 92.1 (1,011) 16.6
Other income 151 1,521 (90.1) 141 6.9
PBT 5,432 12,428 (56.3) 10,522 (48.4)
Tax (922) (3,811) (75.8) (3,848) (76.0)
Effective tax rate (%) 17.0 30.7   36.6  
Minority/prof from assoc 7,652 - - 4,658 64
Adjusted PAT 12,161 8,616 41.1 11,332 7.3
Adj. PAT margin (%) 70.2 40.9 2,933 bps 40.6 2,964 bps
Extra ordinary items (2,522) (211) 1,098 289 (973)
Reported PAT 9,640 8,406 14.7 11,621 (17.1)
Ann. EPS (Rs) 56.0 39.7 41.1 52.2 7.3

Source: Company, India Infoline Research

Sesa’s topline declined 17.8% yoy due to lower volumes
Topline of Rs17.3bn was lower than our estimate of Rs19.3bn due to lower iron ore volumes. Iron ore sales volume of 2.9mn tons was lower by 32.6% yoy and below our estimate of 3.1mn tons. The decline in volume was due to mining ban in Karnataka and logistical bottlenecks in Goa. A restriction on transportation of iron ore in Goa from mid-June ’12 led to lower volumes from Goa. Net realizations increased 8.2% qoq to Rs5,408/ton due to higher sales in export market and a sharp depreciation of the Rupee. Sales volume from Karnataka stood at 0.06mn tons through the e-auction process initiated by the Government. Pig iron sales decreased to 45,000 tons from 59,000 tons in Q4 FY12 due to a planned relining of blast furnace and low availability of iron ore from Karnataka.

Sales volume and realisation

  Q1 FY13 Q1 FY12 % yoy Q4 FY12 % qoq
Sales (tons)          
Iron ore (mn tons) 2.90 4.30 (32.6) 5.20 (44.2)
Pig iron 39,000 58,000 (32.8) 59,000 (33.9)
           
Realisation (Rs/ton)          
Iron ore 5,408 4,502 20.1 4,996 8.2
Pig iron 35,103
BSE 298.00 13.35 (4.69%)
NSE 298.00 13.45 (4.73%)

***Note: This is a NSE Chart

 

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