Jal Irani`s view on Cairn India, Reliance Industries

Jal Irani, MD- Oil & Gas Research, Macquarie Group shares his view on Cairn India and Reliance Industries.

Irani told CNBC-TV18, “In sharp contrast, obviously Cairn is a deep cyclical. Essentially, Cairn is perhaps the only pure play among the majors in Asia to crude prices. Our forecast is that essentially USD 10 per barrel swing in crude prices impact earnings by 13%.”
He further added, “It is a very high quality company and some of the recent finds especially in KG onshore, they have found a fair bit of oil, the resources estimates there seem to suggest that this could be in excess of 500 million barrels, which by any major is a pretty sizeable sum. But that is at the moment it would be exploited in the distant future and in the meanwhile I think it by far remains a deep cyclical expose to oil. So its earnings would indeed get impacted very significantly.”
“Reliance Industries, one key thing that the market is looking for is value accretive growth and essentially growth and how it is going to deploy its cash in a value accretive manner. We did see the Chairman spell out growth plans during the AGM. These growth plans nevertheless are going to have fairly significant growth in the distant future. I am afraid that growth trigger is absent in the near term so it’s a long-term story, not an immediate story.”