Mumbai: Sesa Goa, India’s top private-sector iron ore exporter, posted a forecast-beating net profit of Rs640 crore for the quarter-ending June on a surge in sales and rocketing iron ore prices, two analysts said.
The company posted a more than five-fold jump in net profit in April-June on a near triple rise in net sales of Rs1251 crore.
A Reuters poll of brokerages had estimated net profit at Rs411 crore.
“Results are good on higher volumes and realisations. Also, they paid a lower tax rate at 24% against 34% as expected, helping their bottomline,” a Mumbai-based analyst said requesting anonymity. He has a cautious view on the company.
Analysts expect year-on-year growth for Sesa to be robust due to firm spot iron ore and coke prices.
Prices of iron ore, a key raw material in steel making, doubled in the quarter on supply concerns and input cost pressures.
London-listed miner Vedanta Resources holds a controlling stake in Sesa Goa.
“The company is increasing its share of spot sales of iron ore which will augment its profitability,” brokerage IL&FS Investsmart said in a pre-earnings note.
China is the main market for India’s iron ore exporters. India exports around 90 million tonnes of iron ore, and most of the sales are done on a spot basis.
However, the analyst, who had a cautious view on the company, said he expected a “lag effect” to pull iron ore prices down following a drop in steel rates, thanks to strict government measures.
Shares in the company have risen around 8% in April-June, bucking the CNX Midcap Index’s 16% drop. The broader 30-share BSE Index has fallen 13.95%.
On Tuesday, shares traded at Rs3,116, up 8.26% from the previous close.