What is Satyam’s value?

February 25, 2009

Ramalinga Raju’s big mess is making it harder for bidders and the Satyam board to value the company.

Apurva Shah, Head of Research at Prabhudas Lilladher said that it was quite difficult to valuate Satyam in absence of the profit and loss accounts.

The board meets on Thursday and sources say it is keen on a technology firm to buy Satyam, but how do the numbers stack up?

Satyam gets Rs 1700 crore as receivables per quarter. By that mathematics, the full year’s total receivables are Rs 6800 crore.

According to sources, Satyam could manage Rs 1300 crore with a 26 per cent stake sale.

This means that if any bidder picks up at least 51 per cent, then the price tag could be around Rs 2500 crore.

Satyam's bidders will be given information on client relationship and potential business from various geographies, but in the day's ahead, any acquirer will have to watch for long term risks of securing and saving some of these big contracts.

So, the Satyam board is depends on big corporates to buy into Satyam and save it.

The valuations for Satyam will now depend on the stringent conditions put out by the Satyam board. But no matter what, in a market like this, even the Satyam board will have to be forgiving to a company willing to take the plunge by picking up Satyam.