Cairn India reported a subdued Q1FY16 with EBITDA up only 2% QoQ against 16% improvement in realisation. PAT at Rs 8.4 billion catapulted ~330% QoQ primarily on account of lower exploration write offs and higher other income.

Operating cost on water-flood operations in Rajasthan (RJ) declined 10% QoQ to USD 5.2/bbl due to cost optimisation and improved drilling efficiency. While profit petroleum increased, overall production fell 3% QoQ.

Commenting on the quarterly financial performance, the Edelweiss said, ''We perceive a lower likelihood of merger (with Vedanta) under the current scheme as Cairn's minorities will demand a sweeter deal. We believe the impending merger with Vedanta will weigh on the stock, but its huge cash pile (50% of current value) will effectively cap potential downside. Maintain 'BUY' with Rs 241 target price.''

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