 "'Cairn India best play on rupee depreciation'")
RBS says that Cairn India is probably one of the best plays on rupee depreciation in India as the company not only earns revenue in US dollars but also holds cash in dollars.
[caption id=“attachment_137214” align=“alignleft” width=“380” caption=“Cairn India is engaged in oil and gas exploration, production and transportation. Reuters”]
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The bank believes that using an exchange rate of 52, the gain on the cash balance at end of Q2 would be close to Rs 35o crore.
“Our target price of 325 rupees values the company in US dollars…. Any rupee depreciation would thus have a direct positive impact on our target price,” said RBS in a note.
At 2:30 pm, shares of Cairn India were up 3.5 percent, at Rs 301.
The large-cap stock had outperformed the market over the past one month till 21 November 2011, rising 1.18 percent compared with the Sensex’s 5 percent fall. The scrip had also outperformed the market in past one quarter, gaining 8.37% as against 1.21% decline in the Sensex.
Reuters