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Satyam scrip falls again, regulator to probe acquisition bid December 19, 2008

Posted by dhirendra08 in Asian Markets, Asin Share markets, BSE, Bombay Stock Exchange, Bse news, Bull Market, Business, Capital Market, Cellphone, Stock Market, Stock Market Talk, Stock price, Stock value, Working Capital.
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Good Evening, Satyam computers, one time very good script is showing something unusual. Satyam Computers, which is planning to buy back shares to regain investor confidence, saw its scrip slide again in Friday morning trade, while the market regulator said the IT major’s unpopular and thwarted bid to acquire two promoter companies would be examined.

 

‘We do not want to react quickly to the incident (the acquisition bid that triggered investor outrage), but we will study issues involved and then take a decision,’ Securities and Exchange Board of India (SEBI) chairman C.B. Bhave told reporters here.

 

The Satyam scrip fell about 3 percent since its previous close and was trading around Rs.166, while Maytas Infra – one of the companies Satyam was planning to acquire – saw the free fall of its share value continuing, the scrip losing another 20 percent since Thursday’s close.

 

The Maytas stock was trading at around Rs.248 during morning trade Friday, down Rs.62.10 since its previous close of Rs.310.65.

 

Satyam Thursday said its board would meet Dec 29 to buy back shares, a declaration that is being widely perceived as a move to regain investor confidence that was eroded after the cash-rich company said it would acquire two promoter firms at $1.6 billion despite widespread liquidity squeeze.

 

Both firms are owned by the sons of Satyam’s chief promoter B. Ramalinga Raju.

Equity – Is it the right time to buy? December 17, 2008

Posted by dhirendra08 in Bluechip Companies, Book Value, Book Value Approach, Bull Market, Current market meltdown, Earning Approach, Equity Investment, Future Growth.
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The current market meltdown has left investors shocked and stunned. The important question in everyone’s mind today is does the market have further downside left or has it bottomed out? Nearly everyone is offering some or the other opinion on this question. The economy has posted a growth of 9% in FY08 and the future growth, although slower, is expected to remain around 7%.

Earnings Approach

We expect earnings per share of Sensex companies to remain in the range of Rs 900-950 levels in FY09. FY 10 is likely to post a negative return of around 20%, though the picture will become clearer after the Q3 results come out in January. 

The current level of Sensex implies 10.0 x – 9.4 x P/E of FY09 earnings and probably around 12.5x – 11.3x of FY10 earnings. Historically, since 1991, Sensex has traded in the range of 10-30 times one year forward earnings. So, currently the Sensex is certainly at the lower range of the historical P/E band. Even if things are likely to be different this time due to a worldwide recession, we do not expect more than 20% downside from these levels.

Book Value Approach

Also, if we consider the book value of companies, many bluechip companies are trading below their net worth. Moreover, the current P/BV (Price to Book Value) of Sensex is hovering around 2.3 which is in the range of historic lows of 2-2.4. In last 18 years, whenever the P/BV ratio had drifted to around 2, it has been followed by a smart pull back. For example, in November 1998 when Sensex fell to around 2800 levels (P/BV of 2), the next six months witnessed a strong pullback rally of more than 40% pushing the index to 4000 levels.

 

Ref: theeconomictimes