Cairn India has reached record highs on the BSE amid sell-off talks

MUMBAI: Shares of Cairn India Ltd rose more than 5 per cent to a record high of Rs 358 on the BSE on Friday amid news that Vedanta Resources is in talks to buy a majority stake in UK-based Cairn Energy affiliate.

The scrip, which was flat for most of the session, settled at Rs 355.45, up 4.36 per cent in the last hour of trading on the Bombay Stock Exchange.

Analysts said Vedanta was in talks to buy a 51 per cent stake in Cairn India from its parent firm, Cairn Energy, which reportedly had a 62.4 per cent stake in the stock. The size of the deal is estimated at between -8 8-8.5 billion.

Ilara Securities analyst Alok Deshpande said, “The deal is positive for the stock, as at the bottom of the deal ($ 8 billion) Cairn India will be valued at USD 15.7 billion, with a current market cap of $ 14.4 billion.”

“In the short term, we expect that after the formal announcement, the stock will move towards valuation of the contract, which is expected on August 16, according to media reports,” he added.

Cairn India’s parent company, Cairn Energy plc, has risen nearly 2 percent on the London Stock Exchange and is quoted at 6 4.61 in last afternoon’s trading.

In contrast, Vedanta Resources plc, led by NRI billionaire Anil Agarwal, fell 5.5 per cent to .6 20.61 on the LSE.

Also, Starlight Industries, a Vedanta group firm, sank more than 4 per cent at Rs 160.70 on the Bombay Stock Exchange. Starlight was the biggest loser in the Sensex pack today.

“If there is a deal, it is clear that Vedanta is planning to be a long-term investor. In that case, we think it is fair to evaluate the deal considering the expectation of increasing reserves from other parts of Rajasthan in the near future,” Deshpande said.