Cairn India shares slump after loan to parent Vedanta

Reuters Market Eye - Cairn India shares slump as much as 4.7 percent.

Cairn announced a $1.25 billion loan facility to parent group Vedanta Group, of which $800 million was disbursed in Q1, Jefferies says in a note.

"While management justified it as just a treasury operation given a relatively higher yield (LIBOR + 300bps), we believe returning surplus cash to investors through a dividend payout or buy-back would have been a better utilization," Jefferies says.

Cairn India shares were down nearly 5 percent to 328.90 rupees as of 11:06 a.m.

(Reporting by Abhishek Vishnoi)