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CAIRN INDIA LTD FUNDAMENTAL

BUY Target Price Rs 277 STOCK
Value Parameters
BSE Code 532792 globally diversified natural resources group with
NSE Symbol CAIRN wide ranging interests in aluminium, copper, zinc,
CMP (As on 30th Nov, 2016) Rs 247 lead, silver, iron ore, etc. Through its affiliates,
Face Value Cairn India has been operating for close to 20 years
52 Week High/Low Rs 10 playing an active role in developing India's oil and
Market Cap (Rs cr) 259/107 gas resources. Cairn India has opened 4 frontier
EPS (Rs) (FY16) basins with over 40 discoveries, 31 in Rajasthan
TTM PE ratio (x) 47,440 alone.
-50.3
0.0 Cairn India has a portfolio of 9 blocks - one block
in Rajasthan, which contains multiple assets, two
Shareholding Pattern % (Sep’ 16) on the west coast and four on the east coast of
India and one each in Sri Lanka and South Africa.
Company Overview Oil and gas is currently being produced from
Rajasthan, Ravva and Cambay.
Cairn India is one of the largest independent oil and gas
exploration and production company in India. Cairn India During June 2010, Cairn India and ONGC, the
was rated as the fastest-growing energy company in the 70:30 joint venture partners in the Rajasthan Block,
world, as per 2012 and 2013 Platts Top 250 Global Energy RJ-ON-90/1, commenced sales through the world's
Company Rankings. longest continuously heated and insulated crude
Cairn India operates around 30% of India's domestic crude oil pipeline.
oil production. Cairn India is part of the Vedanta Group, a
Investment Rationale
§ Cairn India, through its initiatives like EOR,

reservoir management has continued to arrest the
natural decline in wells and reported additional
volumes.

§ The company has been able to maintain its cost
optimization. As on Q2FY17 water flood and
blended operating cost at Rajasthan reduced to
$3.9/boe and $5.8/boe respectively. For EOR, the
cost optimization has lowered development and
operating costs leading to better IRR projections.

§ The revised Cairn-Vedanta deal has been
approved by the respective shareholders and
new ratio will give incremental benefit of Rs 30
per share for Cairn India shareholders.

§ The company commissioned its Salaya Bhogat
Pipeline storage terminal & marine export
facilities at Bhogat, which shall give it an access
to larger market for crude oil from Rajasthan
Block.

Concern
§ The company has its business activities related

to exploration and production of oil & gas and
is sensitive to crude oil prices.

Valuations

At CMP of Rs 247 per share the stock trades at P/B
multiple of 0.9 (x). The company has a dividend
yield of 1.2% and we have “BUY” rating on the
stock with a fair value of Rs 277 per share.

4 ARIHANT CAPITAL ¡ DECEMBER 2016