Mah Satyam back among top-5 IT cos; expert says still cheap

Mahindra Satyam, formerly Satyam Computer Services, continues to shine in the stock market. The stock, which has rallied more than 30% in the last seven days, crossed Rs 100 on July 23, and is now back among the top-five Indian IT companies’ list in terms of market capitalisation (with market cap of about Rs 12,000 crore) after Infosys, TCS, Wipro and HCL Tech.As of today, Mahindra Satyam’s market cap is greater than that of its parent company, Tech Mahindra.
Attributing the recent move up in its stock price to a bridge-up, Sanju Verma, CEO - Institution Biz, Proactive Universal Group, said the stock was still trading at a discount. “A lot of analysts are still not factoring in the 1100-1200 acres of land that Satyam holds. If they assume the company has Rs 300 crore of liabilities outstanding against that, even then, the land is still valued at something like close to Rs 11 per share. If you add this Rs 11 per share to the Rs 7 EPS you are talking of purely on the back of earnings momentum, the stock is still available at dirt cheap multiples,” she said.
In fact, the stock in back in the good books of mutual fund managers.

Mutual funds had invested Rs 90 crore in Mahindra Satyam as on June 30.
Says Madhusudan Kela, Equity Head at Reliance Mutual Fund, "After Mahindra has taken over, the confidence in Satyam has increased and obviously it is not an untouchable story anymore."
Tech Mahindra too has been making all the right noises for its new acquisition. In an AGM on July 23, the company said Mahindra Satyam would see a turnaround in four-five years and that it was looking at making Satyam a global entity competing with the likes of IBM in that time.
This bounceback of the Satyam Mahindra price marks the staging of a classic comeback for what was only a few years ago one of India’s premier IT companies before it was rocked by a multi-thousand crore scam in January this year and was written off a close to dead.
It’s been a roller-coaster journey for Satyam! The stock crashed to an all-time low of Rs 11.5 from Rs 200 levels on that one January day, when its erstwhile chairman, Ramalinga Raju, admitted to inflating the company’s balance sheet for several years. With 50,000 jobs at stake, the government took control of the management and soon initiated a bidding process in which Tech Mahindra emerged as the top bidder for Satyam with bid price of Rs 58/share and picked up controlling stake in the company.