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Cairn India stock ended on weak note at Rs 333.75 at 3.02 per cent after the UK-based Cairn Energy PLC divested eight per cent through a bulk deal on the NSE at a steep discount to the market price. Citigroup, HSBC Global, Indus Capital Advisors (UK) and Segantii India were the buyers. Cairn Energy, which offloaded 15.26 crore shares at an average price of Rs 323.12, raised $910 million. Even after this stake-sale, Cairn Energy still retains about 10 per cent stake in the Indian company.
For capex needs
The proceeds will be used to fund Cairn’s ongoing capital requirements, which include the development of discovered resources in the North Sea as well as Cairn’s wider exploration-led growth strategy, the company said.
“The board is focused on creating shareholders' value and continually reviews Cairn’s capital structure to ensure the optimal balance of efficiency and flexibility,” Cairn Energy said in a statement.
Bhavna Thakur, Director & Head of Equity Capital Markets Origination, Citi India, said: “The book witnessed participation from a large number of marquee global and domestic institutional investors, with sizeable demand from FIIs and was covered within three hours of launch, demonstrating the strength of our global distribution and superior execution skills.”
‘Good buy’
Though the stock was under pressure through out the day, brokerages maintain their bullish stance.
Kotak Securities, Deputy Vice-President Research, Sumit Pokharna, said: “The stake sale was already priced in by the market as it was a known fact and it does not impact the fundamentals or the cash flow of the company. We maintain the target price of Rs 365 on the stock that we had given last month.”
“The three most important variables that investors should track for Cairn stock are the crude oil prices, company’s production level and rupee exchange rate. At present levels, the stock offers a good opportunity to buy,” he added.
The price of Rs 325 for the deal was also on expected lines given the large quantity of the shares offered as part of the stake sale, added oil and gas analysts.
According to oil and gas equity analyst K.R. Choksey, Mr Yogesh Patil, the stock is likely to remain range bound between Rs 330 and Rs 360 a share in the short-term. “Fundamentally, there would be no change on the ‘buy’ call for the long term,” he added.
Earlier on June 29, Cairn Energy had sold 3.5 per cent of its stake in Cairn India in 13 tranches and raised close to $371 million through secondary market.
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