Buy Cairn India, target of Rs 287

Buy Cairn India for Rs 287 .We believe that Cairn India Limited (CIL) stock is attractively priced and offers upside as crude oil price continues to remain high. The stock is a momentum play on rising crude oil price. CIL's profit sharing contract with the government, which is over and above the production sharing contract with ONGC, makes it misleading to value the stock on P/E, EV/EBIDTA and EV/barrel of oil equivalent (boe) reserve. Based on DCF of Rajasthan block, which is going to account for almost 85% of total production of CIL going forward, the stock looks undervalued at the current level..NS