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Tech Mahindra: Thoughts on Tech Mahindra (TM)-Satyam merger
` TM valued at a premium to Satyam in the merger process
` Merger creates a large IT organization but still with some portfolio issues
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily22032012.pdf
Thoughts on Tech Mahindra (TM)-Satyam merger. Swap ratio of 1 share of TM for
8.5 shares of Satyam appears to be in favor of TM shareholders, in our view. The merged
entity will have scale, diversified business mix and reasonable positioning in scalable
verticals. Valuations at 10.1X FY2013E earnings may appear inexpensive and trade up in
the near term on new-found positioning. However, TM has to deliver on growth, margins
and return ratios for sustainable rerating. Our revised TP of Rs680 for TM is based on 10X
FY2013E pro-forma earnings. TP for Satyam of Rs80 is based on the swap ratio. SELL.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tech Mahindra: Thoughts on Tech Mahindra (TM)-Satyam merger
` TM valued at a premium to Satyam in the merger process
` Merger creates a large IT organization but still with some portfolio issues
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily22032012.pdf
Thoughts on Tech Mahindra (TM)-Satyam merger. Swap ratio of 1 share of TM for
8.5 shares of Satyam appears to be in favor of TM shareholders, in our view. The merged
entity will have scale, diversified business mix and reasonable positioning in scalable
verticals. Valuations at 10.1X FY2013E earnings may appear inexpensive and trade up in
the near term on new-found positioning. However, TM has to deliver on growth, margins
and return ratios for sustainable rerating. Our revised TP of Rs680 for TM is based on 10X
FY2013E pro-forma earnings. TP for Satyam of Rs80 is based on the swap ratio. SELL.
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