Stock Recommendation: Sesa Goa

Buy Call on Sesa Goa

Current Price: 470

Target: 600

Period: 3 Months

P/E Ratio: 23.09 (Industry average is 23.15)

TPI Rating: * * * * (four stars)

Reason: Sesa Goa is the largest private Iron Ore producers in India. From the beginning of year 2010, there is dramatic increase in the Iron Ore prices. It will help the company to show better results in the coming quarters. This trend will continue at least for the next six months. Last year this company went through a tough time because of the fall in the Iron Ore prices. This will be a good buy for the Short Term or Medium Term.

With China’s steel production increasing every year, the demand for iron ore has been rising too. Between January and February 2010, China imported 22% more ore over the year-ago period at 96 million tonnes. Logically, therefore, the fourth quarter should see higher volumes and revenues both on a year-on-year and sequential basis.

The direction of iron ore prices has been firmly reset for at least the first half of FY11.

Subscribe to our future articles here.