*Satyam: Broking firms divided on Tech Mahindra’s wisdom <http://www.thehindubusinessline.com/2009/04/16/stories/2009041651980100.htm> *
** ** ** ** ** ** ** *Our Bureau * Mumbai, April 15 Broking firms are divided over Tech Mahindra`s wisdom in acquiring a majority stake in Satyam Computer Services for Rs 58 per share. Three of seven reports from leading brokerages have downgraded the Mahindra group company because of its bid for Satyam, while an equal number has supported the company’s decision by recommending or reiterating a buy on the company stock. The biggest bottleneck for Tech Mahindra according to some of the broking firms (Citibank, Nomura Securities, Merrill Lynch, CLSA, Anand Rathi Securities, and ICICI Securities) is the lack of clarity on the exact financial condition of Satyam. With the restatement of Satyam`s accounts expected to take a few more months, it has become difficult to assess the impact of the deal on Tech Mahindra, the brokerages concur. Citibank (which has given a sell recommendation on Tech Mahindra) said: “Lots of unknowns, client confidence issues, execution challenges and liabilities (Upaid and class action suits) increase the risk profile of Tech Mahindra. We rate it High Risk..” According to CLSA, the Tech Mahindra- Satyam alliance does not look “synergistic”. “Is Tech Mahindra financially strong to digest this giant? With $575m of cash needed for the deal and only $110m in hand, we think the answer is NO,” it said in a report downgrading the Tech Mahindra stock from ‘Underperform’ to ‘Sell’. While Centrum Broking has also downgraded Tech Mahindra`s rating, ICICI Securities has suspended the firms` rating. On the other hand, Nomura Securities analysts consider the Satyam bid as ‘a positive for Tech Mahindra since there is very little overlap (service lines, vertical and geographical) with Satyam.’ “We await details about its funding plans to decide whether we would revise our view on the stock. Until then, we maintain our estimates and our 12-month price target of Rs 350,” the Nomura analysts said in a note. Similarly Bank of America-Merrill Lynch has maintained its overweight rating on Tech Mahindra. Interestingly, ICICI Securities has said that Tech Mahindra could lay off at least 4,500-11,000 employees for the difficult task of turning Satyam into an EBITDA (earnings before interest, taxes, depreciation and amortization) positive company. Anand Rathi Securities has retained a ‘buy’ rating on Tech Mahindra. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
