Cairn-Vedanta deal to have short-term negative impact on Cairn: Manish Sonthalia

In a chat with ET Now, Manish Sonthalia, Senior Vice President - Fund Manager, Motilal Oswal Securities, talks about Cairn and ONGC.

ET Now: What is your call post the Cairn-Vedanta deal outcome on Cairn and on ONGC?

Manish Sonthalia: Clearly for the short term if royalty is made cost recoverable than obviously the NPV of Cairn falls and to that extent it is negative for Cairn in the short term. But in the long term, I think the Cairn deal going in the hands of Vedanta is going to be quite positive purely because the volume ramp up which is 125 to 175 and ultimately to 240 is going to add significant value and plus the fact that this amount of money which will be generated by way of profits is expected to be redeployed in the company for finding bigger assets. So on a payback period, the stock does not look too expensive for the long term, but in the short term the implications are negative for Cairn when royalty is made cost recoverable and to that extent this is positive for ONGC.