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Wednesday, December 17, 2008

Satyam - Maytas deal - Investors at loss

Public shareholders who bore the maximum brunt losing more than eight times the promoters. Investors loose 30% in a day.

MUMBAI: In today's 30 per cent crash in the shares of IT major Satyam Computer, it was the public shareholders who bore the maximum brunt losing more than eight times the promoters.

While the promoters' share in the total market capitalisation loss of Rs 4,600 crore stood at about Rs 400 crore, the same for non-promoter shareholders was about Rs 3,300 crore.

Satyam this morning called off a deal announced last evening to acquire two companies promoted by the family members of its chief B Ramalinga Raju for nealy Rs 8,000 crore.

Checkout: Satyam Computer Services - Sell recommendation research report

The promoters, the company chairman B Ramalinga Raju's family, hold just about 8.61 per cent of the company's shares, while institutional and non-institutional investors have more than 72 per cent of stake in the company. About 19 per cent of equity are held in custodian accounts.

At the end of today's trading when Satyam shares plunged 30 per cent to close at Rs 158.05, the company's market cap dropped to Rs 10,650 crore. The stock also hit a 52-week low of Rs 153.80 on the Bombay Stock Exchange.

The shareholders include insurance companies like LIC, financial institutions, mutual funds and foreign institutional investors, including Citigroup Global Markets Mauritius, JPMorgan Asset Management and Government of Singapore among others.

The shareholding details of Satyam are for the quarter ended September, according to information available on the Bombay Stock Exchange.

Yesterday, after the company announced the proposed USD 1.6 billion (Rs 8,000 crore) acquisition of two infrastructure companies led by IT major chief Ramalinga Raju's son, its shares had plunged 55 per cent to USD 5.70 on the New York Stock Exchange.
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3 comments:

  1. Boss, agree with that you are saying. But be sure Satyam and Raju will bounce back. They deserve atleast one chance. How the hell will they restore confidence and win back trust ? there are plenty of way to do it. Almost as if a favour, Mint newspaper ran a story today on this topic with views from brand and image experts pitching in their advise. Satyam will be better off if they pick some words of wisdom from here

    Reg
    Anand

    For those interested, here is the Mint story link

    http://www.livemint.com/2008/12/18221653/What-should-Satyam-and-Raju-do.html

    ReplyDelete
  2. I am sharing some facts, i repeat facts only to share with you why Satyam still is a fundamentally sound company:

    1. Satyam has Presence across the Globe (20 Industries ,65 Countries) more diverse than Wipro & INFY. This does happen by accident. This spread helps Satyam in tough economic conditions. Did you know outside India in Asia Pac Satyam revenue are more than any of the Top 3 Indian IT services firm. De-risked Geographic revenue distribution 21% Europe, 17% Asia Pac, 62% America’s. Best present to leverage emerging markets.

    2. Satyam has Mature Practices DWBI & ERP. HCL had to spend over 0.5 Bn to get the ERP skills which we already have. they just save $ 0.5 Bn

    3. Revenues & Net Income have Grown Five-fold over last 5 years. This by sheer hard work by 50,000 people. Not by accident

    4. FY08 was the 5th successive year of >35% Growth in Net Income. Show’s how they have got profits year after year.

    5. 32% revenue coming from New & Emerging vertical : Satyam has diversified and expanded is industry depth.

    6. Deepest Fortune 500 client penetration 185, Total 690 clients. Clients continue to support Satyam in spite of the issues that have surfaced in last 10 days. Company has as many clients as Infosys and strong fundamentals then why worry?

    7. Company has the largest cash reserve to revenue ratio in IT industry as a result of company employees under management direction … why question it now?

    8. Client delight index is a 4.5 out of 5, client retention is 98% – clients are an asset – do not loose sight of the fact and do not slight Satyam and management for just one aberration – this is an organization and not just a script on the BSE/ NYSE

    ReplyDelete
  3. I completely agree with you as far as Satyam's position in IT Industry is concerned. The only & major problem here is, when company officials think of benefiting only himself and not the shareholders (don't forget shareholders invest in a company to get best returns out of their investments and chairman/MD is nominated to act on similar lines.) It is his job to ensure shareholders are getting best for their investments and here in Satyam, chairman himself was playing false games!

    ReplyDelete

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