Buy Cairn India, target Rs 305:Religare

The management expects production from its Ravva and Cambay basins to decline during the next two quarters to an average of 16,000-17,000boepd. Further, exploration expenses would remain on the higher side which would constrain margins. We are revising our estimates for CY08 to incorporate a crude price realisation of USD 120/bbl from USD 90/bbl earlier; however, we maintain our projection of USD 90/bbl for subsequent years. Further, we are raising our cost of equity to 14.7% from 12.7%, which has caused WACC to move from 12% to 13.8%. Consequently, our target price reduces to Rs 305 from Rs 314. We maintain a Buy recommendation on the stock" according to Religare research report.