Deal fairly priced, say analysts
RIL’s stock may not have reacted positively after the latest acquisition, but the street view seems to view the $1.3 billion deal positively. Eagle Ford Shale — the project where RIL has picked up the latest acreage, is one of the most promising prospects in the game, says brokerage house Macquarie.
The deal compares favorable with RIL’s earlier acquisition in Marcellus Shale. Gas from the Eagle project is also rich in high value hydrocarbons, which makes it more attractive. The broker has a price target of Rs 1,289 on the stock.
Mr Deven Choksey of K R Choksey said the joint venture is expected to start drilling 26 wells in six months and this field has gas reserves of 11 trillion cubic feet which places a value of $2.7 billion. This should add Rs 21 per share to RIL’s stock.
Sharekhan sees an advantage in RIL’s entry into the US gas market. This acquisition of shale gas assets at over $3billion and its $5 billion foray into telecommunications and power sector will ensure an efficient utilisation of cash flow. Sharekhan recommends a price target of Rs 1,215 on the stock.
However, not everyone is bullish on the company. In an earlier note, RBS, a brokerage house, has placed a price target of Rs 855 on RIL with a sell rating. The rationale for the lower rating is the company’s proposed ventures in power and telecom, which have long gestation and will take 3-4 years before generating returns.
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Aurobindo recalls drug in America
New Delhi, June 24:Aurobindo Pharma is recalling a single lot of anti-depressant drug Paroxetine tablets in 40mg strength from the US market due to a labelling error on them.
According to the US food and drug administration’s enforcement report, the Hyderabad-based firm has initiated a recall of a lot of the drug in 30 count bottles on April 16, because of the labeling error.
“Some bottles labelled as Paroxetine 40mg tablets actually contained Citalopram 20mg tablets,” the report said while adding that it is a class III recall.
Class III recalls are for products that are unlikely to cause any adverse health reaction, but that violate FDA labeling or manufacturing regulations.
The Aurobindo Pharma spokesperson declined to comment. — PTI
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