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Cairn India Ltd – IPO. Review-1

December 4, 2006

Background: Cairn India Limited is a wholly owned subsidiary of Cairn Energy PLC of UK. Cairn has been operational in India since several years with various Indian partners. Cairn India’s share in each and every major oil / gas field [DOC]. The Rajasthan oil field, Mangala, is the biggest asset of the company with oil reserves of 839 Million barrels.

Restructuring of Cairn India: Cairn Energy PLC held 100% of Cairn India Ltd. Cairn Energy PLC transferred all the Indian assets and operations to Cairn India Limited and Cairn Energy PLC held 100% stake in the company. It then planned to sell 30% stake in this company by means of an IPO.

Cairn India Ltd Pre-Placement: Cairn Energy PLC went for a pre-placement before the IPO. It sold approximately 10% of Cairn India Ltd to Malaysian Oil Giant, Petronas at Rs 176.48 per share. Videocon and other financial institutions also participated in the private placement and bought 1.8% of Cairn India. This gives the Cairn India a valuation of $6.5 Billion [Rs 30,000 crores]

Cairn India Financials: Total Income for FY2005 was Rs 223.02 crores and PAT of 102.4 crores. For the first of FY2006, their Total income stood at Rs 190 crores and PAT of 83.6 crores. Check out this document for financials of Cairn India.

Cairn India general IPO:
Issue opens on Dec-11-2006 and closes on Dec-15-2006
Issue Size: 328,799,675 equity shares of Rs 10 each at a price between Rs160 and Rs190 through Book Building issue.
Retail Individual Investors Issue Size: 30% approximately 100 Million shares. Issue size for retail investors will be between Rs 1,600 crores and Rs 1,900 crores.

Valuations of Cairn India Ltd: I am not sure how oil analysts and oil lobbies discount stocks like Cairn Energy, based on oil assets or cash flow ? I am hunting for various research reports and I will keep you folks posted on whether to apply for the issue or not.

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Comments

One Response to “Cairn India Ltd – IPO. Review-1”

  1. Mahesh on December 4th, 2006 5:13 PM

    Cool.. waiting for the final recommendation. I had read some where though that compared to ONGC IPO this is very costly. What are the peers for Cairn would it be Reliance and ONGC?

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