Friday, December 26

Reasons for Investment in Satyam Computers

Satyam Computers

The company has seen a severe beating because of a decision to buyout or say bailout Maytas ( satyam = maytas ) infra n maytas properties. This would have meant transferring shareholder money into promoters pockets indirectly whatever be the valuation given.

Although such a move has been a major sentimental and reputation blow to the stock and would continue to hamper any face saving move from the management. In such markets nobody likes uncertainty from management side.The World Bank news was another blow to the already beaten stock

Looking at the Positive side of the story

Now some positives :
The market cap of Satyam is roughly around 9500 cores.
The pure cash or asset side is 7000-8000 cores . They were going to give around 7.5-8k cores for Maytas infra and Maytas properties.


So it implies the cash component is around 80 rs or more per share for every share of Satyam. The debt is nominal.

The IT business continues to be decent enough with decent earnings growth although i am not an IT fan in current scenario.

The stock has corrected as investors are worried that the cash is not safe with this mgmt !. In such a scenario any face saving measure would mean management may possibly try to transfer cash into shareholders pockets through dividend , buy back or any other method . FIIs hold more then 45-50 % and promoters 8 % . Can FIIs dictate the mgmt ! , Will there be a mgmt change etc are favorable turns.


We have already taken positions in Satyam at 157(20%)and 118(30%).we will wait for more opportunities to come.

This type of stagger investment we should always do to conserve our capital

The risk component is any litigation , suit which may hit the cash otherwise the cash is much more secure then before as the management may no more try another coup.

This is just a personal view and can be wrong too ( numbers are not exact but an estimate ) . Investors may do their own research and take exposure with keeping in check of your risk profile.


Satyam management were aware that the deal is going to blow the stock that's why top management sold the stock a day earlier


Now another observation clearly shows the intentions of the top management !!!
As per the insider trading disclosure the

Satyam Computer Services Ltd A S Murthy 16/12/2008 S 19000

Satyam Computer Services Ltd V Murali 16/12/2008 S 20000

So some action from SEBI can come in near future.

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Best Regards,
Bramesh
09985711341

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