Cairn INDIA Limited Company Analysis

Company Profile  :  Cairn India, subsidiary of Vedanta is upstream oil company. Headquarter in Gurgaon. The company is exploring, drilling, importing and development of oil rigs. The company holds nine blocks of oil. One in South Africa, one is Rajasthan. Two on west coast and four on east coast one in Sri Lanka. The company is operating through its 30 different subsidiaries.  The company and it’s JV Partners accounts for more than a 20% domestic oil production and is operating in India for more than 15 years.

Share Holding Pattern :

Vedanta plc Holds big chunk through Twin Star Mauritius Holding, which is Wholly-owned Subsidiary of Vedanta Plc. 

Financials and Ratio :  

 2010-112011-122012-132013-142014-15 2015-16
Revenue 95.10248.9310100.6511829.178855.195652.87
Net Profit (212.67)43.9614746.967454.331320.03853.53
NPM -17.65160.2675.816.9018.35
EPS(1.12)0.2377.1438.957.014.54
Book Value 167.28167.35178.08203.28197.62198.73
Dividend Pay out 0014.8932.01127.8265.89
Dividend per Share 0011.512.593
ROE (0.66)0.1343.3519.223.562.29
ROCE (0.64)0.1341.4318.223.412.19
ROA (0.63)0.1338.5616.863.112.03
D/E0.0400000
Asset Turnover 00.0224.0622.4518.4111.07

Future Prospects : Though big part of Oil and gas sector is dominated by PSU companies Cairn is private sector company. Right now it is part of Vedanta group and the group is planning to merge it with vedanta. As it is upstream oil company and if price of oil will go up, it will make profit for companies.

The uncertainty about the company while writing this is the date when the merger take place. There is one more risk for the company is Shale oil. The cost of Shale is around $60. Whenever the price of  oil will go up above the mark of it, Shale producer will start the business, which increases the supply. To keep price above the mark, The demand is supposed to sufficient high which looks difficult.

Anothe issue  is the cash on balance sheet of  Cairn INDIA. It is possible for vedanta to reduce the debt with the help of the it. Not the issue, but for doing that, Promoter is not paying right cost. LIC, Cairn Plc and some mutual funds holding the stock in portfolio and their demand to make deal sweat was denied for big Time.

My view on the company is neutral.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter