Monday, May 23, 2011

Satyam Results Update & Valuation

Satyam Q4 results were below street estimates. The firm posted Rs. 327 crores of loss for the quarter ended 31st March 2011. Total revenue stood at Rs.1375.3 crores.

Satyam's Q4 loss was mainly on account of exceptional expenditure including payments for SEC and UPAID settlement.

For the full year ended March 31, 2011, the company's consolidated net loss widened to Rs 147.3 crore from Rs 124.6 crore in the same period last year.

Income from operations declined to Rs 5,145 crore from Rs 5,481 crore in the same year-ago period.
The stock reacted negatively to the result and is down more than 3% in todays trade. At the CMP of Rs. 73.85 the stock is having market cap of Rs. 8,695 crores which is more than 1.7 times its current year revenue.
Investors should stay away from the counter as the company still finding it difficult to grow the topline and bottomline. One can start looking at the stock once it comes to the levels of Rs. 50 at which the market cap to sales ratio would be closer to 1 and the risk reward ratio would be favourable

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