Barclays hikes target price for Cairn Energy after Indian arbitration award
Barclays reiterated its 'overweight' stance on shares of Cairn Energy after the oil explorer was awarded $1.2bn, plus interest and costs, by the Permanent Court of Arbitration in its long-running tax arbitration dispute with New Delhi.
The broker also hiked its target price for the company's shares by 34% to 315.0p.
Although it remained to be seen when exactly Cairn would actually collect the arbitration award, Barclays believed it was only that, "a question of when rather than if".
Indeed, it included the full value of the award in its new estimate of the company's net asset value.
However, the value of the award was discounted by two years at a 12% cost of capital to reflect the likelihood that the Indian government would pursue all avenues to contest or delay the payment.