SP Tulsian of sptulsian.com told CNBC-TV18, "In case of Cairn India, one needs to look whether it will be a tender buyback or open market purchases. What I feel that it is most likely to be the open market and maybe the fund allocation of about Rs 5000 crore will be made by the company. 10 percent is permissible if you go by the net worth of closer to about maybe Rs 50,000 crore."
He further added, "The present book value of the share is closer to about Rs 285. So, you can say that the buyback will be closer to about 7 percent of the float. Don't take a call unless and until you have the terms of the buyback known."
"Crude is going to remain the import commodity for our country maybe for next two decades or so. Vedanta have very aggressive plans, it has in fact capability to raise its crude production to about 5 lakh barrels per day also. For that it has been seeking the permission from the government to go for the capex," Tulsian said.
He further said, "Maybe once we have the change of guard or maybe any government comes in then probably the regulatory moves will be viewed with some wisdom and clarity. Thereafter the things are going to get ramped up by the company on the production front. It is a cash rich company. It all depends on the crude price, but one can again say that it is not likely to fall below USD 90 a barrel."
"We pray that the crude always remains soft, but that will be negative for this stock. So, it will be difficult to give a call, but remain invested with five years and don’t expect fireworks from the stock. Maybe if you get a price of Rs 400 on these positive news coming in that it has been given permission and all that one can look to exit from the stock; otherwise look for a return of about 20 percent every year for next five years. This is a very safe stock to have in portfolio," Tulsian said.
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