Analysts' corner

CAIRN INDIA
Reco Price: Rs 326;
Target price: Rs 365
Analysts have raised their target price, primarily driven by weaker rupee and higher crude price assumptions for FY13/14/15. They add, though they have always been confident about Cairn's operational ability, the favourable movement in macro variables (rupee and crude) should single-handedly lead to more investor interest in Cairn, going into 2012. Their in-house view on currency suggests a sharp reversal in rupee looks difficult, with a best case of it reversing to 49 versus the dollar. Oil prices are also likely to stay between $105 and 115 in the medium term, driven by supply side concerns in West Asia more than offsetting the lower-than-expected demand growth in Europe and the US. Their revised rupee and crude price assumptions give valuations of Rs 210 a share for the Mangala, Bhagyam and Aishwarya fields. They attribute exploration upside of Rs 96 a share to other Rajasthan fields. Cairn's other fields contribute Rs 22 a share and a net cash of Rs 37 a share, arriving at a revised target price of Rs 365. Accumulate.

 

ELARA Capital