Subscribe Resurgere IPO with long term view: Keynote
Keynote Capital has recommended ‘subscribe with a long term view’ to the IPO of Resurgere Mines & Minerals India.
By ET Online |
MUMBAI: Keynote Capital has recommended ���subscribe with a long term view��� to the IPO of Resurgere Mines & Minerals India. The Rs 121-crore issue opened for subscription on Aug 11 and closes today. It is in the price band of Rs 263 - 272 per share.
Resurgere Mines & Minerals has a rather short track record of three years in the iron ore business, with a miniscule market share in the domestic iron ore market. It however has mines with estimated reserves of 74.82 million tonnes, which is a major positive.
The company���s production increased by 40 per cent in 2007-08. In view of the proven reserves, Keynote believes the company can scale up aggressively, going forward. Other positives are (i) the company will have access to six numbers of railway rakes during the current year, leading to cost savings on logistics going forward, (ii) proximity of mines to domestic markets and (iii) high ferrous content of its reserves, vis-��-vis Sesa Goa.
Resurgere Mines & Minerals currently outsources the entire extraction and processing activities involved in mining activities. Keynote concerns include short track record in the iron ore business, management bandwidth and revenue visibility.
On comparing Resurgere Mines & Minerals with Sesa Goa, the former���s IPO is slightly expensively at 7.9x FY09E and 6.7x FY10E vis-��-vis Sesa Goa���s 5.9x FY09E and 5.0x FY10E. It is more expensive based even on EV / EBITDA, at 5.4x and 4.5x FY09 and FY10 respectively, vis-��-vis 3.5x and 3.2x for Sesa Goa.
Resurgere Mines & Minerals has a rather short track record of three years in the iron ore business, with a miniscule market share in the domestic iron ore market. It however has mines with estimated reserves of 74.82 million tonnes, which is a major positive.
The company���s production increased by 40 per cent in 2007-08. In view of the proven reserves, Keynote believes the company can scale up aggressively, going forward. Other positives are (i) the company will have access to six numbers of railway rakes during the current year, leading to cost savings on logistics going forward, (ii) proximity of mines to domestic markets and (iii) high ferrous content of its reserves, vis-��-vis Sesa Goa.
Resurgere Mines & Minerals currently outsources the entire extraction and processing activities involved in mining activities. Keynote concerns include short track record in the iron ore business, management bandwidth and revenue visibility.
On comparing Resurgere Mines & Minerals with Sesa Goa, the former���s IPO is slightly expensively at 7.9x FY09E and 6.7x FY10E vis-��-vis Sesa Goa���s 5.9x FY09E and 5.0x FY10E. It is more expensive based even on EV / EBITDA, at 5.4x and 4.5x FY09 and FY10 respectively, vis-��-vis 3.5x and 3.2x for Sesa Goa.
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