Sensex up nearly 300 points; Tech Mahindra soars
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Tech Mahindra has purchased a 42.7% equity stake in Hyderabad-based Satyam during April 2009 when the group was near collapse after an accounting scam.
The firm has since functioned below the name Mahindra Satyam and has came forth from the disaster profitable, registering a net gain of Rs 3.08 billion for the past quarterly period of last year.
The takeover of the remaining stake will involve an exchange of stocks, with Satyam shareholders receiving one Tech Mahindra share for every 8.5 Satyam share.
A combined report from the firms stated, "The aim is to consolidate the information technology and related businesses and form a single entity, providing services to the sector."
In addition, Satyam, four other completely-owned Mahindra arms comprising Venturbay Consultants, C and S System Technologies, CanvasM Technologies and Mahindra Logisoft Business Solutions will be considered for complete integration.
Satyam Computer shocked business India in the year 2009 when its originator B. Ramalinga Raju admitted he had for years overstated earnings and amplified the firm's financial statement by over $1 billion.
The scam nearly pushed Satyam into insolvency but Tech Mahindra came to save the firm.
The stock looks good for medium or long term investment.
The investors can buy the stock on declines.
Satyam, Tech Mahindra talk to staff, allay job loss fears
Tech Mahindra is expected to give decent returns over the next 12-18 months.
After the merger with Mahindra Satyam, the company is becoming stronger. The EPS will go higher and P/E will be down. This will help the stock move up.
For Mahindra Satyam, there will be limited up movement. The stock will depend on Tech Mahindra.
It is also expected that Tech Mahindra will get more orders in coming times as the company will become reputable and 5th largest IT company in India.