Sesa Goa positioned to ride

"Sesa Goa is India’s largest private iron-ore miner and exporter. The company is well positioned to ride the current boom in the iron-ore market on the back of an output of approx 10mtpa, which it is planning to increase to 15mtpa over the next three years. Further, Sesa Goa is mulling increasing its spot sales to 50% by approx CY10E from 24% at present, given that the current differential between the spot and the contract markets is more than 100%. The company has access to resource & reserves of approx 207mnte (i.e. 20 years of mining life) of iron ore. At Rs 2,618/share, Sesa Goa is currently trading at FY09E and FY10E P/E and EV/EBITDA of 7.9x & 6.9x and 4.4x & 3.3x respectively. Initiate BUY with a target price of Rs 3,990/share,"