Satyam...analysis

Mahindra Satyam came out with its much awaited figures, quite in line with the market expectations. It reported a loss of Rs 124 crore and Rs 5,481 crore in revenues for FY10. It gave very limited disclosure of the operating metrics where its various segments of operations are concerned. The company now is well placed as a mid-tier IT company and is still among the top players in the listed space.

It has demonstrated better employee productivity. With a low employee headcount, the company has seen a reduction of 34% in the employee costs over FY09 and also a decrease in administrative expenses.

It is quite interesting to note that even after the scam; the company has managed to retain its talent and important clients. It has not only retained its existing clients, it has also added new ones. Though the client list has decreased from 500 to 350, it is still in line with its peers.

The company has managed considerable profits in FY10 which indicates a significant turnaround. The current order book boasts of many multi-million deals from clients such as GE, GlaxoSmithKline, OC Tanner and Saab. Apart from this it also holds a strong cash balance which would help in expanding and diversifying.

Moreover, we foresee a merger with Tech Mahindra in near future. Once through with this, the new merged entity would have the opportunity to participate in large deals.

 Thus, we see this stock doing well in time to come.