The Hindu Business Line : Satyam Computer recoups after sharp slide

Hyderabad, Dec. 24: The Satyam stock has hit a 52-week low of Rs 114.65 on Wednesday on reports of World Bank confirming that it barred the company for eight years from getting the contracts.

The stock, however, recovered later in the day to close at Rs 134.95.

Analysts said that the low valuation in the intra-day trade must have infused some interest in the stock that helped it recover.

It fell by over 40 per cent in the last three weeks from a high of Rs 243 in the beginning of this month.

World Bank admission

Though the Bank on Wednesday clarified that the ban was not related to data theft allegation, it slapped on the company the charges of giving improper benefits to its staff and of failing to maintain documentation to support fees charged for its subcontractors.

The stock markets, which quickly responded to World Bank’s decision on Tuesday and pushed Satyam’s stock down by 14.5 per cent, continued to hammer the shares further, pushing it down to Rs 114 at one point – the lowest figure in the recent years.

Satyam’s stock had plummeted by 30.22 per cent to close at Rs 158.05 on December 17, the day when the company announced the proposal to acquire the two companies promoted by Mr B Ramalinga Raju’s family for $1.6 billion.

Though the stock showed signs of recovery following the announcement that the board could consider a buyback at its upcoming meet on December 29, it fell again.

According to BNP Paribas report, “We believe that following this episode, investors may find Satyam’s cash balance as being at risk. We therefore arrive at the worst-case valuation after removing the current gross cash/share of Rs 78 from our valuation. This leads us to a per share value of Rs 99.”

But Tuesday’s reports of Bank’s banning the company and the rumours of Mr Raju’s stepping down pulled back the stock further.

“Satyam’s net cash as of Q2FY09 is a healthy at about 45 per cent of its market cap. If the company, by management’s own admission, does not see a large synergistic acquisition in the near-term, it should consider paying a special dividend this year. We believe the announcement of an increased dividend will put to rest investor concerns that Satyam’s cash is at risk,” the BNP Paribas report added.

Bank clarification

Responding to media reports, the Bank said that there was no evidence that Satyam was involved in malicious attacks on the Bank’s information systems.

Meanwhile, a company spokesperson has refused to make any comments on a query as to why it chose not to inform the exchanges on the developments with the World Bank.

“As we stated earlier, we don’t comment on issues related to our clients,” the spokesperson said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Pakistan stalls, obfuscates and erases evidence

Kotak Securities fined Rs 10 lakh

It’s a bumpy ride for BPO cos

Bill to change Apeda Act to protect trade mark interests

Banks roll out red carpet to Govt employees, PSU staff

M&A deals lack lustre on slowdown blues

India Inc raises Rs 45,000 cr less this year compared to 2007

Mutual back scratching

Oil majors stare at Q3 losses

Maruti, Nissan in talks over quantum of orders

Fortis Healthcare board clears Rs 1,000-cr rights issue

Satyam Computer recoups after sharp slide

ICICI Bank to depend less on agents

Slowdown reflected more on deposit side: J.M. Garg