New Delhi: Scam-hit Satyam Computer has entered again the elite club of the top 100 companies in terms of market valuation - a status it had lost after being hit by the country’s biggest corporate fraud.
Following a sharp rally seen in its share price last week on the back of disclosure about its profits, Satyam’s market capitalisation has grown to about Rs7,800 crore, placing it among the 100 most-valued firms in the country.
The company had moved out of this league soon after the disclosure about the fraud on 7 January - the day when its founder and then chairman B Ramalinga Raju admitted to multi- year financial fraud at the company.
Two days later on 9 January when the company’s share price and market valuation hit their all-time lows at Rs6.30 a share and about Rs600 crore, respectively - Satyam did not figure even among the 300 most-valued firms.
In contrast, Satyam was placed as the country’s 34th most-valued firm with a market capitalisation of over Rs15,000 crore on 16 December - just before Raju unsuccessfully tried to acquire two firms promoted by his family in his bid to conceal the financial fraud at the company.
While it is still to recover about half of its lost value due to the scam, the shares have grown back to Rs80-level - representing a 13-times surged from its low.
Between the announcement of aborted attempt to acquire Maytas Infra and Maytas Properties and the disclosure letter about the fraud on 7 January, the company lost more than 80% in its market value, while its slide continued further till it reached an all-time low of about Rs6.30 per share on 9 January.
Prior to its fall, Satyam was the country’s fourth most-valued IT firm after Infosys, TCS and Wipro, but had become one of the least valued on 9 January.
Satyam now ranks at the seventh position among IT companies after TCS, Infosys, Wipro, HCL Tech, Oracle and Tech Mahindra and at the 97th spot among the top 100 companies.
Tech Mahindra’s market valuation has also increased significantly to around Rs8,799 crore since it won the bid for acquiring controlling stake in Satyam.
Tech Mahindra’s market capitalisation has increased by as much as Rs4,420 crore, since 13 April, its shares have more than doubled to Rs722 on 12 June as compared to Rs359.45 on 13 April.
Last week, Satyam shares got a boost from its results for October-December 2008 with Rs160 crore profit in the quarter which points to a promise of a strong comeback under new owner Mahindras.
Reeling under the about Rs 10,000-crore financial scam that necessitated restatement of accounts, Satyam was at its nadir in January with a measly profit of Rs4 crore before showing signs of revival by recording a Rs52 crore profit in February. This was despite losing about two dozen clients.
In October-December 2008 - a period that saw the beginning of Satyam’s fall from grace -- the IT firm posted a consolidated net profit of Rs160.50 crore and a total income of Rs2,327.21 crore. The announcement came within a month of Tech Mahindra, an IT arm of Mahindra & Mahindra, acquired controlling stake that valued Satyam at Rs5,800 crore.
However, analysts believe entering into Satyam stock at this moment may be a high risk move as still uncertainties prevail on the future of the two entities.
“Uncertainty about their future make both Satyam and Tech Mahindra a high risk investment, though Tech Mahindra seems relatively better as it may gain considerably with its increased size,” Bonanza Portfolio assistant vice-president Avinash Gupta said.