Go short on Cairn, avoid OMC stocks: Saurabh Mukherjea

In a chat with ET Now, Saurabh Mukherjea, CEO-Institutional Equities, Ambit Capital shares his views on Cairn and OMCs. Excerpts:

ET Now: What is it that you like out of the oil and gas space Cairn ahead of its buyback meet tomorrow would that be an interesting play or would you now look at any of the OMC lot?

Saurabh Mukherjea: We have had a long-standing sell on Cairn and we will stick to that, we still have concerns about their ability to explore the pending reserves in Rajasthan. We see it as a bit of one trick pony. There is one reserve that they have exploited well. Beyond that there is hard to have visibility on Cairn’s future earnings.

But within the oil marketing companies we see HPCL and Indian Oil as better placed. Clearly a lot of the OMCs' fate hinges on how the government uses them to political ends. So I am never that comfortable pitching OMCs to investors as a long term fundamental play because by and large the OMCs are not being run to have minority shareholders make money. It has been run with an entirely different set of objectives. Therefore if investors can avoid playing OMCs I would suggest that they stay away from the OMC stocks, for it is very difficult to make money in these sorts of names.