MUMBAI: Shares of Cairn India Ltd rose more than 5 percent on Friday, hitting a record high of Rs 358 on the BSE, amid reports that Vedanta Resources is in talks to buy a majority stake in its subsidiary UK based Cairn Energy.
The scrip, which was flat for most of the session, rocketed in the final hour of trading on the Bombay Stock Exchange to settle in with a net gain of 4.36 percent at Rs 355.45.
Analysts said the shares are zooming in on reports that Vedanta is in talks to buy a 51 percent stake in Cairn India from its parent company, Cairn Energy, which has a 62.4 percent stake. The size of the deal is estimated at $8 billion to $8.5 billion.
“The deal is positive for the stock as even the lower end of the deal ($8 billion) will value Cairn India at $15.7 billion, compared to its current market cap of $14.4 billion,” said Elara Securities analyst. Alok Deshpande.
“In the near term, we expect the stock to rise towards the deal valuation following the official announcement, which is expected on August 16, according to media reports,” he added.
Cairn India’s parent company, Cairn Energy Plc, also zoomed nearly 2 percent on the London Stock Exchange, trading at £4.61 in late afternoon trading.
By contrast, NRA billionaire Anil Agarwal-led Vedanta Resources Plc fell 5.5 percent to £20.61 on the LSE.
In addition, Sterlite Industries, a company of the Vedanta Group, fell more than 4 percent to close at Rs 160.70 on the Bombay Stock Exchange. Sterlite was the biggest loser in the Sensex pack today.
“If the deal comes through, it is clear that Vedanta intends to be a long-term investor. In that case, we believe the valuation of the deal is reasonable given our expectation of a reserve upside from other Rajasthan fields in the future,” Deshpande said.
This post Cairn India hits all-time high on BSE during share sale talks
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