SATYAM

Mahindra Satyam


Current market price: Rs 91.85

Target price: Rs 125.

Upside: 36.09%

Mahindra Satyam has done reasonably well after Mahindra group took over the management control of the company. There has been no announcement about any major client breaking up their association with the company in last one year. In fact, in last 18 months, Satyam has secured over 40 orders - both big and small. It has successfully delivered project for FIFA World Cup. With continued order flow, clientele retention, and efficient manpower in place; i believes the company is well in growth mode. The company is expected to declare results by the month end after a gap of around 2 years. i expects the results to be quite better than expected. In fact, it believes the revenue would be above Rs 80 billion for FY10. Margins might be a bit low but under the table management of Mahindra, it believes the company will improve the margins at the levels of its peers in due course of time. Currently, the stock trades at Rs 91.85. Even with a conservative revenue estimate, the stock trades at 1.38x on Market Cap to Sales compared to an average of 3.75x for top 10 companies (by market cap, except Financial Technologies). The above is based on a number of assumptions and a fall in share prices is not ruled out in the event the results are not in line with the assessment or there are negative surprises on the liabilities front. Therefore, it would be prudent for investors to wait for the announcement of results and other important details about the financial position of the company. However traders willing to take high risk can accumulate the stock around current market price for a target of Rs 125 - 145 - 185 as soon.

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