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Mumbai: Shares of Cairn India Limited rose 5 per cent to a record high of Rs 358 on Friday. BSE between the news Vedanta Resources UK-based Cairn is in talks to buy a majority stake in a subsidiary of Energy.
Shares, which were flat for most of the session, shot up in the last hour of trading on Bombay inventory The exchange closed at Rs 355.45 with a net gain of 4.36 per cent.
Analysts said the stock jumped from reports that Vedanta is in talks with its parent company Cairn Energy to buy 51 per cent stake in Cairn India, which holds 62.4 per cent. The size of the deal is estimated to be between US$ 8-8.5 billion.
“The deal is positive for the stock, as the lower end of the deal ($8 billion) would value Cairn India at $15.7 billion as against the current market capitalization of $14.4 billion,” said Alok Deshpande, analyst at Elara Securities.
“In the short term, we expect the stock to move towards deal valuations after the official announcement, which is expected on August 16 as per media reports,” he added.
Cairn India’s parent company, Cairn Energy Plc, also jumped nearly 2 per cent on the London Stock Exchange and was priced at £4.61 in afternoon trade.
In contrast, NRI billionaire Anil Agarwal-led Vedanta Resources Plc fell 5.5 per cent to £20.61 on the LSE.
Besides, Vedanta Group firm Sterlite Industries closed over 4 per cent lower at Rs 160.70 on the Bombay Stock Exchange. Sterlite was the biggest loser in the Sensex pack today.
“If the deal goes through, it is clear that Vedanta plans to become a long-term investor. In that case, we think the deal valuation is fair, given our demand for reserves from other regions of Rajasthan at some point in the future. Looking at the expectations,” Deshpande said.
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