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Satyam stock rises 7% on positive sentiment

Satyam stock rises 7% on positive sentiment
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First Published: Tue, Jan 05 2010. 10 20 PM IST

Graphics: Ahmed Raza Khan / Mint
Graphics: Ahmed Raza Khan / Mint
Updated: Tue, Jan 05 2010. 10 20 PM IST
Mumbai: Shares of Satyam Computer Services Ltd on Tuesday jumped 7% in intraday trading amid positive sentiment about its recovery from the largest corporate accounting fraud in Indian history that surfaced a year ago.
Shares of Satyam closed at Rs106.05 each, or 6.1% higher from its Monday close, signalling that investors and analysts are confident that the company, now branded Mahindra Satyam, had put the past behind it.
Graphics: Ahmed Raza Khan / Mint
The Bombay Stock Exchange’s benchmark index, the Sensex, rose 0.73% to close at 17,686.24 points.
Last year, nearly all brokerages tracking the software services company had suspended coverage as the beleaguered firm’s financials were deemed unreliable after founder-chairmanB. Ramalinga Raju’s 7 January 2009 confession that he doctored Satyam’s books over several years to the tune of Rs7,136 crore.
Satyam’s stock plummeted from Rs179 at the end of trading on 6 January 2009 to Rs39.95 at the next day’s close.
Some brokerages are now beginning to give out investment recommendations on the firm, even though it has until 30 June to announce audited financial numbers.
“There is no news out there yet about the company’s fundamentals, so it is hard to pinpoint the reason for such a spike,” said Ankur Rudra, IT (information technology) analyst with UK-headquartered investment advisory Noble Group Ltd.
“One reason,” he added, “could be the positive talk around the company in the media, given the anniversary of Ramalinga Raju’s confession.”
According to Bloomberg, of the brokerages that track Satyam, as of Tuesday, First Global Stockbroking Pvt. Ltd and BNP Paribas Securities India Pvt. Ltd had a “buy” recommendation, JP Morgan India Pvt. Ltd an “overweight” rating, ABN Amro Securities India Pvt. Ltd a “sell” recommendation and NVS Brokerage Ltd a “strong buy” recommendation.
Noble does not track Satyam and intends to do so only after the audited financial data is available.
BNP Paribas Securities, the Indian investment advisory arm of the French financial services firm, was one of the first to restart rating the Satyam stock and give out recommendations in September 2009. The brokerage firm currently has a target price of Rs130 for the stock.
JP Morgan has a price target of Rs140, while First Global’s target for Satyam is Rs160.
In a 24 December update, the latest from BNP Paribas Securities, vice-president Abhiram Eleswarapu said, “The big picture still looks good” and the “turnaround story is still alive”.
“Incrementally, the investors are moving away from the sense of uncertainty to start focusing on the core business aspects of Satyam,” said Nitin Padmanabhan, IT analyst with Centrum Broking Pvt Ltd. “With the liabilities being sorted out one by one, we are also getting closer to the merger (with Tech Mahindra Ltd).”
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First Published: Tue, Jan 05 2010. 10 20 PM IST
More Topics: Satyam | Stock | Shares | BSE | Money Matters |