Cairn India to touch Rs 413: Goldman Sachs

Goldman Sachs has reiterated its ‘Buy’ rating on Cairn India with a price target of Rs 413, suggesting a 19% upside. The stock currently implies LT Brent of $83/bbl from FY13 onwards. Moving to a going concern valuation from the current asset-based valuation would re-rate the stock.

Cairn India’s 4QFY12 adjusted net profit ofRs 2,390 crore was in line with GSe/Bloomberg consensus of Rs 2,370 crore. The EBITDA of Rs 2,980 crore, +17% qo-q, largely driven by higher volumes from Bhagyam production start-up in January and higher realisation.

Given the Bhagyam start-up and ministry approval for raising Mangala volume to 150Kb/d from 125Kb/d, Cairn is on track to grow volumes by 1.6X over FY12-14E, one of the best growth profiles among emerging market “oily” stocks.