Saturday, October 2, 2010

Mahindra Satyam - Outlook.


While the company has lost a large number of customers and employees, the positive aspect is that the worst is behind. “With the clouds of uncertainty disappearing over the financials, more RFI (request for information) would come. The company would need to gain smaller clients before class-one clients come on board,” says Arup Roy, senior research analyst, Gartner.
In short, analysts suggest the company should start witnessing a rise in revenues in the coming years. The company, which had battled a reduction in employee strength consequent to business realignment and attrition, is now looking to add over 3,000 employees in 2010-11, an indication of the management’s confidence for the future. While the cash and investments on hand worth Rs 2,807 crore (as against a debt of just Rs 42 crore) provide confidence, its balance sheet looks strong to weather any future pressures. However, liabilities in the form of class action lawsuits ($68 million) and other claims could affect profitability. Additionally, with the US economic recovery still weak, it could act as an overhang on the stock.

Profits will be doubled in next year.


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