Open offer for Satyam given the surge in the stock price. It will still get its additional 20 per cent at Rs 58 a share through a preferential allotment.The money stays with TechM even as it gains a controlling 51 per cent stake in Satyam. It’s a win-win situation,
TechM spent Rs 1,756 crore to acquire a 31 per cent stake in Satyam in April. That worked out to Rs 58 a share. According to analysts, TechM will have to pay about Rs 1,710 crore for the additional 20 per cent stake, It is a slightly costlier option compared to the open offer route, since the preferential allotment will lead to equity dilution.
Given that Satyam has about Rs 373 crore of cash on its books, the actual outgo will be only about Rs 1,340 crore. But it’s a small price to pay for TechM for control of the company and the money.
The company reported a standalone net profit of Rs 181 crore on revenues of Rs 2,294 crore for the December 2008 quarter. The numbers for February were even better: Rs 52 crore unaudited profit on total revenues of Rs 637 crore, with an operating margin of 17.5 per cent. Analysts had expected that it would post losses for the next few quarters at least.
The Hyderabad-based firm also said it won orders worth at least $380 million (Rs 1,825 crore) from 215 clients since January. It is felt that integration of the companies won’t be exactly easy. But if Satyam can maintain the current performance, the company could net revenues of Rs 8,000- 8,500 crore and profits of Rs 750-800 crore for the full year. Around 51 per cent of the profits will accrue to TechM, which should take the combined EPS to anywhere between Rs 80 and Rs 85 a share.
TechM has more than doubled in three weeks, while Satyam has gained more than 47 per cent during the same period.
Although the valuation of TechM is not alarmingly high, analysts believe that the stock could take a breather at current levels. “Profit booking may not be a bad idea:’ says Tarun Sisodia, head of research at Anand Rathi Securities.
Clearly, TechM has played its cards correctly and it is already raking in the benefit.
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