Buy Cairn India

Cairn India’s stock has delivered smart returns to investors in the last six months vis-a-vis the BSE Sensex. While last year’s news of crude oil gushing out of Cairn’s Rajasthan block brought some cheer, the recent upgradation of crude oil reserves and a hike of peak output would broaden the smile even further. The proven oil reserves estimate in the Rajasthan fields has been raised from 3.7 billion barrels of oil equivalent (boe) to 4 billion boe.

Addition of contingent resources and increase of 2.5 billion boe from its exploration blocks has seen an upward revision in Cairns’ Rajasthan block resource potential to 6.5 billion boe from 3.7 boe earlier. Overall, with higher production from its core MBA fields, Barmer Hill and newer discoveries, Cairn is expected to deliver a plateau production of 240,000 barrels per day (bpd), from the earlier projected 175,000 bpd.

Improved fortunes
Cairn India’s valuations are strongly leveraged to crude oil pricing outlook compared to its peers. One of the reasons why the stock has been doing well recently is also the surge in the crude oil prices beyond $80 dollar levels. In the first half of 2009-10, with tepid crude prices, Cairn’s fortunes did not look bright. However, the second half had a different tale.

The company’s stock been a major outperformer against both the BSE Sensex and peers like ONGC, as crude oil prices improved on the back of receding fears of global recession. The good news was further confirmed when many experts revised their long-term crude oil price forecast from $75 per barrel to around $85-90 in the medium term. Cairn’s recent announcement (on March 23, 2010) further boosted sentiment. The company now expects to touch peak oil production of 240,000 bpd by around 2012-13, which is 20 per cent higher than what was earlier envisaged.

Mangala drives growth
While the peak crude oil production is some time away (2-3 years) and will be achieved in a gradual manner, Cairn’s production is slated to rise sharply in the next few months. The company is already producing 20,000 bpd from Train 1 (against a capacity of 30,000 bpd). However, the production is expected to reach 125,000 bpd by June 2010 quarter when Train 2 and 3 (production capacity of 50,000 bpd each) would become operational. In time with start-up of the two trains, Cairn’s 600 km heated pipeline up to Saylala (Gujarat coast) is expected to get commissioned.

SUM-OF-THE-PARTS
Block	NPV (Rs cr)	NPV (Rs/share)
RJ-ON-90/1 (Rajasthan)	45,912.0	240.6
KG-DWN-98/2	2,403.0	12.6
CB/OS-2	1,190.0	6.2
Ravva	964.0	5.1
Exploration upsides	7,460.0	39.1
FY11 end net cash	3,327.0	17.4
Mar 2011 fair target value	61,256.0	321.0
Source: Edelweiss research

With the production ramp up on at the Mangala field, the trains and pipeline infrastructure (to commence operations in the next 3 or 4 months), Cairn has already contracted 143,000 bpd of crude oil sales with MRPL, Indian Oil, Reliance Industries and Essar Oil, providing it the visibility for crude off-take. While the tie-up amounts to about three-fifths of its peak oil production, additional demand could come from new capacity additions from Reliance Industries and Essar Oil in the next few years.

Going ahead, Cairn is extending its pipeline infrastructure to Bhogat, Gujarat coast, which is scheduled to get completed in CY2011 and will give it access to marine transportation of crude. With this, the company’s production is expected to touch 175,000 bpd in CY2011, which is expected to be ramped up further to 240,000 in CY2013. These production upsides are subject to government approvals and considering the country’s burgeoning oil imports, they are expected to come sooner than later.

Conclusion
As per current developmental plans, the processing capacity post-commissioning of all the trains stands at 205,000 bpd, which will be ramped up to achieve a plateau production of 240,000 bpd. Capacity of both the processing terminal as well as the pipeline could be enhanced by minor de-bottlenecking and upgradation of facilities with incremental capex. This along with the planned capex will see Cairn invest about $1.2-1.4 billion by CY2011; it has already invested about $2.7 billion until now. Overall, analysts have implied a value of about Rs 25-35 per share to their earlier target price in line with the enhanced production and new discoveries.

OIL PUSH
in Rs crore	FY09	FY10E	FY11E	FY12E
Net sales	1,433.0	1,707.0	7,246.0	12,443
EBITDA	898.0	1,170.0	6,395.0	11,430
Net profit	804.0	1,111.0	3,870.0	7,385.0
EPS (Rs)	4.2	5.9	20.4	38.9
P/E	72.0	52.1	15.0	7.8
E: Analyst estimates

Going ahead, a focus on the latest technologies like 4D, fraccing would come in handy when the company goes for exploration for about 14 wells in three offshore blocks on the west and east coasts of India by September 2010. Cairn India holds exploration and production stakes in 10 blocks in India and one in Sri Lanka (drilling is expected to start in H1 2010-11). The stock currently trades at 7.8 times its estimated 2011-12 earnings, which appears to be fair. Further triggers could come in the form of any major discoveries in its exploratory assets or a spurt in crude oil prices. Investors with a medium-term perspective can consider the stock.

Our Recommendation :

The scrip faces huge resistance around 330 levels. Buy below 300 for a target of 425 in a years time frame. Use dips to buy and exit at target price.

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Buy Cairn India

The company is set to emerge as one of India’s leading petroleum producer - and possibly the largest onshore producer - once its oilfields in Rajasthan reach peak production in coming years. Higher production will boost revenue in the coming quarters. Going ahead, the profits are likely to show astonishing returns on year on year basis, assuming that the company would be able to meet its production targets and there would not be any major negative movement in crude prices and no substantial appreciation in rupee from current levels. So, we recommend to buy this stock and hold for a period of 1-2 years with target price of Rs 375.

Cairn - Buy around 165

Source :businessline 03-05-09

Cairn India (Rs 185.4): 

Cairn India has limited trading history that makes it difficult to pronounce a long-term view on the stock. But the stock appears to have strong support around its listing price of Rs 140.

Though there was a sharp decline below this level in the mayhem of October 2008, it rebounded strongly to close above this level in just two sessions. Next long-term support below Rs 140 would be the panic low of Rs 88 formed on October 27, 2008. Investors can hold the stock as long as it does not record a weekly close below Rs 125.

Key long-term resistance is at Rs 245. Reversal from this level can pull the stock lower towards Rs 165 or Rs 135. Investors with a medium-term perspective can divest some their holdings on a failure to move above this resistance.

That said, a break-out above Rs 245 will give the next long term target of Rs 342 for the stock. Stop loss for medium-term investors can be at Rs 165.

Our Research Team Views :

Day High Low Rs.188-180 on 29th April 2009
Monthly High Low Rs.210-169
6M H/L Rs. 208-131

Sectoral Trend - Neutral

This share has risen sharply more than 80% in the last 2 months. The following are the ideal ranges for buying and selling :

Buying Range : Rs.165-175
Selling Range : Rs. 225-230 short term

Wait for the price to the buying range on correction in the stock markets.

Holding period : 12-18 months
Returns expected : 100% plus


Equity Research Team

Intelligent Investor - Invest Advisory Arm of

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Market Voices 13-03-09

Today the Indian market witnessed one of the strongest session in recent months. Largecap stocks gained in strength though midcap and smallcap stocks were muted in their gains. Sensex is up 5.3% and Nifty is up 4%. BSE Midcap index was up 0.8%, BSE Smallcap index was up 2.5% over the week. BSE Metals index up 6.7%, BSE Auto index up 6.5%, and BSE Oil & Gas index was up 6.2%.  

It was a cheerful day for the Indian market that closed on a highly positive note. Sensex shut shop at 8756, up 413 points and Nifty at 2719, up 102 points from the previous close. CNX Midcap index was up 2.9% and BSE Smallcap index was up 1.9%. The market breadth was positive with advances at 890 against declines of 202 on the NSE. Top Nifty gainers included DLF, Tata Power and Tata Motors while losers included BPCL, ABB and NTPC.  

Hold long position in RIL, says Rajat Bose, technical analyst, on CNBC TV18. But do not buy at current levels because it is trading near its resistance level of Rs 1320, he adds. The stock is at Rs 1282.35, UP 6.7% on the BSE.  

Hold NTPC with long-term view, says Gaurang Shah of Geojit Financials, on Zee Business. Buy more at Rs 165, he adds. The stock is at Rs 170.20, down 2% on the BSE.  »

Hold Nagarjuna Construction for 12 months, says Sailesh Kanani of Angel Broking on CNBC Awaaz. It will give returns of 80-100%, he adds. The stock is currently trading at Rs 40.50, up 4.1% on the BSE.  

The Indian economy is close to bottoming out and it could turn around by Q4 this year, says Sam Mahtani of F&C Investments on CNBC TV18. He expects the second half of the year to be positive backed by the steep decrease in interest rates and aggressive monetary policy actions that was taken over in the past couple of months.  

Stay invested in Axis Bank, says VK Sharma of Anagram Stock Broking on CNBC TV18. It is one of those stocks in the private sector which has done pretty well, he adds. The stock is currently trading at Rs 330.55, up 8.6% on the BSE. 

Hold long positions in Nifty for target of 2780 and stop loss of 2660, says E Mathew, technical analyst, on CNBC TV18.  

It was a stellar day for the Indian market thanks to excellent global cues. Sensex closed at 8789, up 445 points (provisional) and Nifty at 2725, up 108 points (provisional) from the previous close. CNX Midcap index was up 3.1% and BSE Smallcap index was up 1.9%. The market breadth was positive with advances at 870 against declines of 315 on the NSE. This is the largest point and percentage gain for Nifty since December 10, 2008, says NDTV Profit.  

Buy Sesa Goa on dips, says Ashwani Gujral, technical analyst, on CNBC TV18. It has support at Rs 65 and resistance at Rs 105, he adds. The stock is at Rs 80, up 5.5% on the BSE.  

Go long on Cairn India at Rs 170 with target of Rs 175, says Vijay Bhambwani, technical analyst, on CNBC TV18. Keep stop loss of Rs 167, he adds. The stock is currently trading at Rs 169.70, up 3.95% on the BSE.  

Buy DLF when it goes above Rs 150 with target of Rs 162, 180 and 211, says Prasad Kushe, technical analyst, on CNBC Awaaz. Keep stop loss of Rs 140, he adds. The stock is currently trading at 153, up 11.8% on the BSE.  

Hold Videocon Industries, says Rajesh Jain of SMC Global Securities on Zee Business. It has resistance at Rs 140-150, he adds. The stock is currently trading at Rs 84.50, up 1.8% on the BSE.  

The Indian market is trading firm with the Nifty above the 2700 mark. Commodity stocks are showing strength. The Asian markets closed on a high. Sensex is trading at 8716, up 372 points and Nifty is at 2709, up 92 points from the previous close. CNX Midcap index is up 2.7% and BSE Smallcap index is up 1.8%. The market breadth is positive with advances at 887 against declines of 300 on the NSE.  

Buy DLF on dips, says Sudarshan Sukhani, technical analyst, on CNBC TV18. It is worth taking a long call on this stock, he adds. The stock is currently trading at Rs 151.50, up 10.7% on the BSE.  

Buy Ambuja Cement with target of Rs 75 and 86, says Prasad Kushe, technical analyst, on CNBC Awaaz. Keep stop loss of Rs 63, he adds. The stock is currently trading at Rs 68.80, up 1.6% on the BSE.  

HSBC maintains a buy call on Reliance Industries with target of Rs 1640, reports CNBC Awaaz. It is expected to give returns of 36% from current levels, it adds. The stock is currently trading at Rs 1271.50, up 5.8% on the BSE.  

Hold Chambal Fertilisers with stop loss of Rs 32, says Rajesh Jain of SMC Global Securities on Zee Business. It is trading in the range of Rs 32-42, he adds. The stock is currently trading at Rs 36.10, up 3.1% on the BSE.  

Hold GMR Infra with target of Rs 85, says Rajesh Jain of SMC Global Securities on Zee Business. The stock is currently trading at Rs 71.50, up 3.7% on the BSE.  

Buy Tata Motors with target of Rs 162 and 172, says Prasad Kushe, technical analyst, on CNBC Awaaz. Keep stop loss of Rs 148, he adds. The stock is currently trading at Rs 158.30, up 8.5% on the BSE.  

Buy Dena Bank with target of Rs 36, says Ashwani Gujral, technical analyst, on CNBC Awaaz. Keep stop loss of Rs 28, he adds. The stock is currently trading at Rs 30.85, up 4.1% on the BSE.  

Buy ICICI Bank on dips, says Sudarshan Sukhani, technical analyst, on CNBC TV18. It has a long-term support between Rs 200-250, he adds. The stock is currently trading at Rs 307, up 8% on the BSE.  

The Asian and European markets are trading positive and following the global cues, the Indian market continues to hold up fairly well. Both the largecap and midcap indices are showing good gains. Sensex is trading at 8668, up 324 points and Nifty is at 2695, up 77 points from the previous close. CNX Midcap index is up 2.6% and BSE Smallcap index is up 1.4%.  

Hold HUL which has support at Rs 185 and Rs 210, says Ashu Bagri, technical analyst, on NDTV Profit. It has resistance at Rs 245, he adds. The stock is currently trading at Rs 228.50, up 1.4% on the BSE.  

Exit Indiabulls Real Estate on rally, says Sharmila Joshi of Systematix Shares on NDTV Profit. Invest in some other sector altogether, she adds. The stock is currently trading at Rs 89.60, up 4.7% on the BSE.  

Hold Shree Renuka Sugars with target of Rs 98-100, says Akshita Deshmukh, technical analyst, on CNBC Awaaz. It has support at Rs 75, she adds. The stock is currently trading at Rs 76.75, up 2.1% on the BSE.  

Investors should sell Satyam on rally, says Phani Sekhar of Angel Broking on CNBC Awaaz. There is, however, trading opportunity in this, he adds. The stock is currently trading at Rs 46.60, down 1.3% on the BSE.  

Hold Axis Bank and sell when it reaches Rs 425, says Ashu Bagri, technical analyst, on NDTV Profit. It has support at Rs 220-270 and resistance at Rs 352-396, he adds. The stock is currently trading at Rs 326, up 7.1% on the BSE.  

Hold L&T for 2-3 years, says Gaurang Shah of Geojit Financials on Zee Business. It will give very good returns, he adds. The stock is currently trading at Rs 603, up 4.7% on the BSE.  

Buy Cairn India at its support level of Rs 150, says Sudhanshu Pandey, technical analyst with LKP Shares, on CNBC Awaaz. Sell at Rs 168-170, he adds. The stock is currently trading at Rs 169.80, up 4% on the BSE.  

The Indian market continues to look good and cheerful as the Asian markets surge too. The indices are gaining ground. Banks, IT, realty and metals zoom. Sensex is trading at 8654, up 311 points from its previous close, and Nifty is at 2687, up 68 points. CNX Midcap index is up 2.4% and BSE Smallcap index is up 1.3%. The market breadth is positive with advances at 852 against declines of 302on the NSE.  

Hold Tech Mahindra at current levels, says VK Sharma of Anagram Stock Broking on CNBC TV18. The stock is currently trading at Rs 260 on the BSE.  

Hold Rajesh Export and exit when it reaches Rs 30, says Ashu Bagri, technical analyst, on NDTV Profit. It has support at Rs 19-20, he adds. The stock is currently trading at Rs 22.30, down 0.9% on the BSE. 

Hold Hero Honda with target of Rs 1040, says Akshita Deshmukh, technical analyst, on CNBC Awaaz. Keep stop loss of Rs 935, she adds. The stock is currently trading at Rs 957.60, down 1.5% on the BSE.  » 

Invest in Escorts with long-term view, says Paras Bothra of Ashika Stock Broking on CNBC Awaaz. It will give good returns, he adds. The stock is currently trading at Rs 36.65, down 2.9% on the BSE.  

Hold GVK Power for long term with stop loss of Rs 12, says Gaurang Shah of Geojit Financials on Zee Business. The stock is currently trading at Rs 18.45, up 1.9% on the BSE.  

Buy SBI, Axis Bank and PNB on dips, says Daljeet Kohli of Emkay Shares and Stock Brokers on CNBC Awaaz. These are safe stocks to invest in, he adds.  

Buy Mahindra & Mahindra at Rs 280, says Sudhanshu Pandey, technical analyst with LKP Shares, on CNBC Awaaz. It has resistance at Rs 334, crossing which it might go up to Rs 410, he adds. The stock is currently trading at Rs 352.20, up 7% on the BSE. 

Hold Reliance Capital with stop loss below Rs 274, says Simi Bhaumik, technical analyst, on Zee Business. The stock is currently trading at Rs 303.80, up 7% on the BSE.  

At noon, the market continues to look good, steadying the gains of the day. Most heavyweights are pushing the indices up, except for NTPC which is trading in the red. Sensex is trading at 8625, up 281 points from its previous close, and Nifty is at 2685, up 68 points. CNX Midcap index is up 2.4% and BSE Smallcap index is up 1.4%. The market breadth is positive with advances at 867 against declines of 268 on the NSE.  

Buy Bharti Airtel at current levels but with strict stop loss, says Sudarshan Sukhani, technical analyst, on CNBC TV18. The stock is currently trading at Rs 550.70, up 0.1% on the BSE. 

Buy Satyam at around Rs 38 and hold for 3 years, says Gaurang Shah of Geojit Financials on Zee Business. Stop loss for short term should be Rs 32, he adds. The stock is currently trading at Rs 46.25, down 2.01% on the BSE.  

Buy IDFC on decline at around Rs 40-42, says Paras Bothra of Ashika Stock Broking on CNBC Awaaz. One can get returns of 10%, he adds. The stock is currently trading at Rs 47, up 5.2% on the BSE.  

Sell RIL on rally, says Sudhanshu Pandey, technical analyst with LKP Shares, on CNBC Awaaz. Crucial levels to watch out for are Rs 1260-1280, he adds. The stock is currently trading at Rs 1238, up 3% on the BSE.  

Hold ICICI Bank with stop loss of Rs 248, says Simi Bhaumik, technical analyst, on Zee Business. It has resistance at Rs 330-350, she adds. The stock is currently trading at Rs 305.50, up 7.5% on the BSE..  

Buy Kotak Mahindra Bank at around Rs 230-210 with trading target of Rs 255-260, says Anil Maghnani, technical analyst, on CNBC TV18. Keep stop loss of Rs 205, he adds. The stock is currently trading at Rs 239, up 3.3% on the BSE.  

Hold Rolta India with stop loss of Rs 38, says Simi Bhaumik, technical analyst, on Zee Business. Exit when it reaches Rs 47-50, she adds. The stock is currently trading at Rs 43.35, up 4.8% on the BSE.  

An hour into opening, the market is looking good, holding on to the morning's gain. The Asian markets are rallying, too, with Hang Seng and Nikkei looking rather strong. Sensex is trading at 8584, up 244 points from its previous close, and Nifty is at 2677, up 59 points. CNX Midcap index is up 2.1% and BSE Smallcap index is up 1.5%. The market breadth is positive with advances at 820 against declines of 249 on the NSE.  

Buy Ashok Leyland on dips with stop loss of Rs 15, says Sudhanshu Pandey, technical analyst with LKP Shares, on CNBC Awaaz. It has a crucial level of Rs 17.20, crossing which it might go up to Rs 22, he adds. The stock is currently trading at Rs 17.15, up 3.3% on the BSE.  

Sell Dewan Housing on rally, says Paras Bothra of Ashika Stock Broking on CNBC Awaaz. The company is under pressure at the moment, he adds. The stock is currently trading at Rs 53.65, down 0.6% on the BSE.  

Hold Tata Motors with target of Rs 185-195, says Simi Bhaumik, technical analyst, on Zee Business. Keep stop loss of Rs 135, she adds. The stock is currently trading at Rs 153.60, up 5.2% on the BSE.  

Hold Tata Steel with target of Rs 165-175, says Simi Bhaumik, technical analyst, on Zee Business. The stock is currently trading at Rs 160.80, up 3.1% on the BSE.  

Buy Emco with stop loss of Rs 23, says Anil Singhvi, market expert, on CNBC Awaaz. Traders keep target of Rs 31-32, he adds. Investors can expect returns of 25-30%, he says. The stock is currently trading at Rs 29.40, up 13.1% on the BSE.  

Buy Sesa Goa on decline of 5-10%, says Paras Bothra of Ashika Stock Broking on CNBC Awaaz. The stock is currently trading at Rs 78.80, up 4% on the BSE.  

Go long on Bank Nifty with target of 3525-3550, says Devangshu Dutta, market expert, on CNBC TV18. Keep stop loss of 3375, he adds.  

Sell Wipro on rally at Rs 225 with target of Rs 200, says Anil Singhvi, market expert, on CNBC Awaaz. Keep stop loss of Rs 230, he adds. The stock is currently trading at Rs 215.95, up 1.8% on the BSE.  

Traders should buy equities today, says Sudarshan Sukhani, technical analyst, on CNBC TV18. He feels that buyers could either take profits or carry their position into Monday.  

The market opens on a reasonably good note today, following a rally in the US market. Autos and financial stocks are leading the gains. Sensex is trading at 8563, up 219 points from its previous close, and Nifty is at 2676, up 59 points. CNX Midcap index is up 1% and BSE Smallcap index is up 0.4%. The market breadth is positive with advances at 401 against declines of 58 on the NSE.  

Go long on Nifty Futures with target of 2690, says Devangshu Dutta, market expert, on CNBC TV18. Keep stop loss of 2580, he adds.  

Some covering by Nifty 2500 Put buyers was seen yesterday, says VK Sharma of Anagram Stock Broking on CNBC TV18. The Options data now indicates a neutral view with IVs coming down, he adds. He sees resistance for Nifty at 2680 and feels that a higher closing would lead to a short covering rally.  

There could be a short covering rally in the next few days followed by a collapse, says Anil Maghnani, technical analyst, on CNBC TV18. He sees resistance levels for Nifty at 2650 and 2700 and support at 2410 and 2480.  

The bias is on the upside for the near term given the positive global cues, says Amitabh Chakraborty of Religare Securities on CNBC TV18. He feels that the Nifty can go up to 2700, while the key support is at 2500. There are hopes that the Q3 GDP may be revised upward after the good IIP data, he adds