Satyam's arm flexes its muscle
INFOTECH stocks are the flavour of the season, and analysts are seeking and finding new reasons to back their counters. Consider for instance Satyam Computers, where analysts see the increasing interest and improved valuations in its 70 per cent subsidiary Satyam Infoway as the key driver.
Internet service provider Satyam Infoway which is slated to come out with a $60-m ADR issue next month, is expected to place its ADR's at $14 to $ 15 per share. If such valuations hold true, it would mean a near doubling in the market capitalisation of Satyam Infoway to $309m.
About two months ago, the US based Sterling Commerce had picked up a 2.7 per cent stake in Infoway, with analysts then valuing the company at $180m. At current prices Satyam's equity holding in Infoway is being valued at Rs 760 crore or nearly Rs 140 per share of Satyam Computers. This, analysts say, should find a reflection in the valuation of the Satyam Computer scrip on the domestic bourses. Meanwhile, Satyam's performance for the second quarter is expected to be encouraging, and much better than the first quarter performance. With speedier realisations the financial costs are projected to come down substantially in the second quarter, but more importantly the corporate's exposure to Y2K segment is slated to come to less than 10 per cent of its revenues. A smart improvement over the 18 per cent seen in the first quarter. Offshore services will continue to account for about 25 per cent of revenues and geographic spread concentrated in US, Europe and Japan.
Satyam is learnt to have added as many as 30 new clients in the first half, six of which are the one's which will fetch annual billings of over $1m. For the FY'2000, Satyam's EPS is projected in the region of Rs 22 rising upwards of Rs 37 in the succeeding year. PE multiples which are conservatively placed when compared to NIIT and Infosys are also likely to drop down from the present 60 to just about 32-based upon prospective earnings.
economictimes.com |
