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All is not lost for Satyam investors: Experts

This article was posted on Jan 15, 2009 and is filed under Press Releases

Despite the pain of the last three days after Satyam’s former Chairman Ramalinga Raju revealed that the IT major’s books were doctored by Rs 7,000 crore and the stock touching Rs 10, experts feel all is not lost for Satyam’s investors.

Ambareesh Baliga of Karvy Stock Broking feels despite the Satyam stock falling 90%, some value could be salvaged. He advises existing investors to hold on and dissuades new investors from entering in. “Investors who have bought it at much higher levels have already lost 80-90%. So, for the balance 10% they can take a chance because there are two schools of thought. One says there is a possibly of it disintegrating and shareholders may not get anything. Maximum what one will lose is just Rs 15, but one has already lost Rs 300. However, there is one outer chance that possibly you could have a white-knight coming in. In that case, at least some value could be salvaged. When people have already lost 90%, they can take a chance for the balanced 10%. But if one is talking of a fresh investment in Satyam at this point of time, it is a clear no.”

Udayan Mukherjee, Stocks Editor, CNBC-TV18, also feels that investors should not go in for a distress sale now as the company’s situation may not be as bleak as what Raju has portrayed. “If today one sells and on Monday you find you that the situation is actually not too bad, maybe the balance sheet is not as bad, maybe the real business is actually not so bad as being painted, and maybe there is some cash lurking somewhere else, which just got taken out recently. One will regret that decision to sell if the stock bounces back to Rs 60-70.”

KC Reddy, Head-Asset Management, Amas Bank, feels the market impact is overestimated in the case of the Satyam scam. “Whatever had to happen has already happened or will get over in the next three days.” Reddy believes it is a very attractive business as it has large clients like Chevron and Caterpillar for years. “They have pretty impressive list of clients and the fact is no client has come back and said that you have not delivered.”

Also, the BSE and NSE have decided to let Satyam trade on the exchange, despite the NYSE suspending trade on Wednesday.

All is not bleak for investors as even corporates like L&T which acquired 3.95% in Satyam last month have decided to hold on. AM Naik, CMD, L&T said the company won’t sell now as the IT major’s business has potential. “There is no intention of buying or selling Satyam shares as of now.”

But not all experts share this optimism. Nirmal Jain, CMD, India Infoline, said Satyam’s business is not viable. “We won’t buy any stock as the company can go bankrupt. I am surprised that trading in Satyam is still continuing.”

This view is also shared by Bhavin Shah of JP Morgan. He sees business continuity risk for Satyam’s clients. He feels the Satyam fiasco could benefit other Indian IT companies. “Who knows whether Satyam will actually be around in the next couple of weeks? There is a business continuity issue here as well. So, that benefit is bound to occur to the other IT companies which customers have high confidence in terms of the integrity of the management.”

Aadil Ebrahim, Investment Manager, Bowen Capital Management, feels there Satyam is strong in certain verticals like package implementation that their peers don’t heavily have. “So, these teams may just move over to Infosys, TCS, or Wipro and take the clients with them.”

source: moneycontrol

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