Stock Review: SESA GOA

Although a number of events — such as 20% stake buy in Cairn India, Karnataka's iron ore exports ban and logistic problem at Orissa — have hit Sesa Goa's stock in the past few months, the company enjoys a sound financial and operating atmosphere. Sesa Goa's production cuts in China, where it exports 70% of its output, due to energy norms and reduced government subsidy, appears discouraging. This has impacted its valuations, which at 9-10 times its annual earnings, are at a discount to its peers. Though its short-term outlook remains bleak, an improvement in iron ore prices could be the next trigger for its earning growth.