Cairn deal will not be positive for Sesa Goa for short term: Shrikanth Shetty

Shrikanth Shetty, Head Equity Advisory, Unicon Investment Solutions in an interview with ET Now talks about the implications of the Cairn India deal on Sesa Goa and Sterlite Industries.

A billion and a half they may be well equipped but how would the market view a company taking a 20% stake in oil and gas asset?

The markets are not going to take it positively for Sesa Goa at least from a short term perspective because it is not clear how it would benefit Sesa Goa.

First of all it’s a 20% stake so its not the only benefit Sesa Goa gets in terms of dividends. Even if the money is utilized the benefit of it may not be completely available for shareholders. There might be some negative effect on Sesa Goa from a short term perspective.

What does this means for Sterlite Industries? The pricing is pretty much in line with what the market had estimated a couple of days back and which is why the market is probably breathing a sigh of relief that there is no overpaying that the company is doing with regard to the figure that the market had in mind. How would you view Sterlite Industries from a six-month perspective?

If you look at Sesa Goa and Sterlite both were correcting. Even Sterlite had planned to pay a part of this price for Cairn India. But this has not been the case from what I read from the announcements till now. Its only Sesa Goa which is going to share 20% and the balance will be to Vedanta Plc.

So as long as Sterlite is kept out of this whole deal that will be positive because at least it will be a clear metals play and that’s where this positive reaction which you are seeing today. The stock has been correcting over the last few days prior to this deal so we are just seeing a positive reaction on account of that.