13 Apr 2009, ET Bureau
MUMBAI: The successful bid by Tech Mahindra to acquire scam-tainted Satyam Computers has started a new trading strategy in the bourses. While most brokers ET spoke to, are wary of taking positional calls on either companies, the trading idea is to buy Infosys and TCS if the sectoral view is positive or short Tech Mahindra if the outlook on IT is negative.
At 12.40 pm, Tech Mahindra was trading 13.7% higher at Rs 364 while Satyam fared 7% higher at Rs 50.45. However the value was much lower than Tech Mahindra’s 52-week high of Rs 990 in May 2008.
Brokers said both counters witnessed sizeable trading volumes. "We’re not sure why the two counters are rallying so high. Positional calls of both stocks can only be taken post Infosys results," said Networth Stock Broking research head Deepak Sawhney. "If Infosys comes out with good fiscal fourth quarter numbers and a fairly good sectoral outlook, then we’d be able to say Tech Mahindra’s acquisition of Satyam will benefit both the companies. If Q4 numbers are bad and outlook negative, the Satyam acquisition will weigh heavy on Tech Mahindra," Mr Sawhney added.
On the valuation of the deal, Tech Mahindra offered Rs 58 per share for the Satyam bid, while engineering firm L&T made an offer of around Rs 49 for each Satyam share.
"One niggling worry is why did L&T bid at such a low price," said another Mumbai-based fund manager. "They sure did not want to pay anything more than what the company deserved. Tech Mahindra paying around Rs 9 more for Satyam will turn terrible expensive if sector outlook turns further negative," he added.
Brokers - who are positive on IT sector - are advising clients to buy Infosys and TCS; not many are advising clients to buy either Tech Mahindra or Satyam. Brokers possessing negative views on IT are asking clients to short Tech Mahindra, mutual fund sources said.
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