Analysts' picks: Cairn India
Macquarie Research has reaffirmed its ‘outperform’ rating on the stock, but has cut the target price by 1.4% to Rs 276 due to the change in 2008 West Texas Intermediate (WTI) forecast
CMP: Rs 196.503
Target price: Rs 276
Macquarie Research has reaffirmed its ���outperform��� rating on the stock, but has cut the target price by 1.4% to Rs 276 due to the change in 2008 West Texas Intermediate (WTI) forecast.
���We have revised down the WTI crude oil price forecast by 6.3% for 2008. Our new forecast has the 2008 figure adjusted down to reflect the recent weakness in prices and the risk that slowing demand growth keeps prices in a range of $100-110/bbl (blue barrel),��� said Macquarie in a note to its clients.
The firm has cut CY08E profit-after tax for the company by 7% and increased CY09E PAT by 1.8% after factoring in new crude oil price assumptions and INR/USD exchange rates. According to Macquarie, Cairn plans to use enhanced oil-recovery (EOR) techniques at its Rajasthan fields.
���If successful, EOR may increase the recovery factor by 10-20%, or P2 reserves, by 309m barrels of oil equivalent(BOE) compared with 794m BOE currently, thus extending the production plateau,��� the Macquarie note said.
���Cairn plans to drill 15 exploratory wells in CY08, most of them in the second half. We have assigned a premium of Rs 50 per share (around 18% of equity value) to Cairn���s strong track record in striking oil,��� the note added.
Target price: Rs 276
Macquarie Research has reaffirmed its ���outperform��� rating on the stock, but has cut the target price by 1.4% to Rs 276 due to the change in 2008 West Texas Intermediate (WTI) forecast.
���We have revised down the WTI crude oil price forecast by 6.3% for 2008. Our new forecast has the 2008 figure adjusted down to reflect the recent weakness in prices and the risk that slowing demand growth keeps prices in a range of $100-110/bbl (blue barrel),��� said Macquarie in a note to its clients.
The firm has cut CY08E profit-after tax for the company by 7% and increased CY09E PAT by 1.8% after factoring in new crude oil price assumptions and INR/USD exchange rates. According to Macquarie, Cairn plans to use enhanced oil-recovery (EOR) techniques at its Rajasthan fields.
���If successful, EOR may increase the recovery factor by 10-20%, or P2 reserves, by 309m barrels of oil equivalent(BOE) compared with 794m BOE currently, thus extending the production plateau,��� the Macquarie note said.
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���Cairn plans to drill 15 exploratory wells in CY08, most of them in the second half. We have assigned a premium of Rs 50 per share (around 18% of equity value) to Cairn���s strong track record in striking oil,��� the note added.
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