JPMorgan overweight on Sesa Goa after Sterlite merger

JP Morgan initiated coverage of Sesa Goa with an “overweight” rating and a September 2013 target price of Rs 240.

The investment bank cited the earnings prospect of Sesa Goa following its merger with Sterlite Industries, with “high quality” assets in zinc and earnings growth driven by oil.

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“In our view post merger, the combined SESA STLT entity would offer investors best in class resource diversification with top quality assets in zinc and oil,” JPMorgan said in the note dated on Wednesday.

JPMorgan added that heavy capital spending of the company was coming to an end, although a re-rating of the stock depended on the performance of its aluminum and power businesses, while coal “remained the missing part in the diversified portfolio.”

Sesa Goa shares were down 0.4 percent at Rs 171.70 as of 2.30 pm.

Reuters