Oct 25, 2013, 09.08 AM IST
The company's earnings are a direct play of Brent prices which have been firm. Its earnings are dollar denominated and what's more, even its cash is dollar denominated. So, a goldilocks scenario should have played out.
Like this story, share it with millions of investors on M3
Why is the market not enthused with Cairn India?
The company's earnings are a direct play of Brent prices which have been firm. Its earnings are dollar denominated and what's more, even its cash is dollar denominated. So, a goldilocks scenario should have played out.
Like this story, share it with millions of investors on M3
Why is the market not enthused with Cairn India?
The company's earnings are a direct play of Brent prices which have been firm. Its earnings are dollar denominated and what's more, even its cash is dollar denominated. So, a goldilocks scenario should have played out.
Reason being?
The company's earnings are a direct play of Brent prices which have been firm. Its earnings are dollar denominated and what's more, even its cash is dollar denominated. So, a goldilocks scenario should have played out.
In the second quarter its revenues jumped 15 percent quarter on quarter (QoQ), EBITDA jumped 20 percent sequentially and the adjusted net profit jumped 26 percent. Any other stock should have been re-rated on these numbers, but not Cairn.
And why is that?
There are two major headwinds for that- the first one is the residual 10.27% stake that Cairn PLC is holding after it sold majority stake to Vedanta. The grapevine suggests that it's looking to sell this stake but is not getting the right price. Infact, it looks like even Vedanta is playing hard ball and is not willing to pay anything more than the current market price which incidentally is similar to what they paid to acquire the majority stake in the first place.
The second reason is the potential hike in cess that Cairn might be faced with since the finance minister has drawn a line in stone on his fiscal deficit target of 4.8 percent. Keep in mind, this target was first announced with an under recovery projection of around Rs 1 lakh crore which has now gone up to around Rs 1.6 lakh crore. The government cannot punish ONGC beyond a point and the market fear is that at some point Cairn will be made to make good some shortage.
The theory in some circles of government is that the cess on Cairn is down almost 20 percent in dollar terms purely due to currency depreciation and since all of Cairn's earnings are dollar denominated, they should be made to pay up in dollar terms. Keep in mind, when the cess was last revised up, it led to a massive fall in stock price and the market is right in being fearful of the same playing out again. In any case, it's well known that the Vedanta group and the current regime don't really enjoy the most cordial relationship.
So what to do with the stock?
It is the only consensus buy in oil & gas space from the brokerage community but the problem is that the uncertainty on earnings hit might just keep the stock depressed.
Anda sedang membaca artikel tentang
Why is the market not enthused with Cairn India?
Dengan url
https://segarsaries.blogspot.com/2013/10/why-is-market-not-enthused-with-cairn.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
Why is the market not enthused with Cairn India?
namun jangan lupa untuk meletakkan link
Why is the market not enthused with Cairn India?
sebagai sumbernya
0 komentar:
Posting Komentar