India Infoline downgrades Sesa Goa to Sell

MUMBAI: India Infoline has downgraded Sesa Goa to ���Sell��� with an upward revised price target of Rs 257 per share.

���The Sesa Goa stock price has rallied 4.3x over the last one year and 1.9x by the end of Q1 FY10, on expectations that the company make an acquisition in the near term. The bullish sentiment in the stock has also been due to firm spot iron prices and a surge in demand for iron ore in China.

We believe that iron ore prices would trade around the current levels in the near term as the Chinese steel production is expected to decline as steel prices have cooled off. We have upgraded our target price for Sesa Goa
from Rs 235 to Rs 257, incorporating 1) the increase in royalty rates 2) higher iron ore realisations and 3) increasing the valuation multiple to match its global peers.

However, we feel that the run up in the stock discounts most of the positive news related to iron ore prices or any inorganic growth announcement in the near term. As a result, we downgrade Sesa Goa from Market Performer to SELL,��� the report said.