The verdict seems to be split among stock market analysts about whether the merger between Cairn India and Vedanta Ltd, both subsidiaries of London-listed Vedanta Resources plc, is good for minority investors at Cairn.

In both press meetings and discussions with analysts, the top management of all three group companies have taken great pain to explain that the proposed merger will be mutually beneficial. And some analysts agree. Brokerage firm Motilal Oswal has deemed it a win-win situation for minority shareholders of both Cairn and Vedanta.

“Cairn’s shareholders will now get additional exposure to low-cost high-quality diversified set of metals and power business thereby reducing the risk to single commodity,” said the Motilal Oswal report.

According to the company, Cairn’s valuation for the $2.3-billion stock swap took into account the book values of both entities, the prevailing market price (60-day volume weighted average), and discounted cash flow valuation. The last method assumed that crude oil would be stable at $60/bbl in FY-2016 and long-term price (after three-to four years) of $80/bbl with an annual escalation of 2-2.5 per cent. While reserving judgement on Cairn, Kotak Securities has pointed to how much the merger will benefit Vedanta Ltd, recommending a buy call.

However, ICICI Securities found the merger ratio (1:1.04, after accounting for the 7.5 per cent redeemable preference share) to be disappointing for Cairn India’s shareholders. The oil explorer holds ₹16,867 crore of cash in its books, while its metals-and-mining group company is laden with debt. Stock movement on Monday delivered mixed signals as well. On the BSE, Cairn India gained 3.79 per cent to close at ₹187.60 while Vedanta Ltd lost 1.49 per cent to finish at ₹181.25.

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