Small investors have a reason to smile now | business | Hindustan Times
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Small investors have a reason to smile now

With the uncertainty around Satyam having ended, its small investors can breathe easy with a strong corporate house behind the fraud-hit company. For shareholders of Tech Mahindra, the acquirer, the benefits will accrue over the long term. HT Correspondent reports.

business Updated: Apr 13, 2009 23:08 IST
HT Correspondent

With the uncertainty around Satyam having ended, its small investors can breathe easy with a strong corporate house behind the fraud-hit company. For shareholders of Tech Mahindra, the acquirer, the benefits will accrue over the long term.

As the deal went through, Tech Mahindra shares went up by 25 per cent initially but closed with a gain of 12.3 per cent. On the similar ground Satyam shares were up by 16 per cent but closed the day with a gain of 3.6 per cent.

“The deal is good for the Satyam shareholders as the bid comes with a cap on Satyam’s share price,” said Gaurav Dua, head of research, Sharekhan.

For Tech Mahindra shareholders, experts believe that the benefits would accrue in the long term when the synergy comes in.

“It would be beneficial in the long run but is going to be a long process of patience to make the venture profitable for Tech Mahindra shareholders,” said Gajendra Nagpal, CEO, Unicon Investment Solutions. “Tech Mahindra shareholders would be relieved that the company did not pay extra to get the deal through.”

However, the structure of the funding for the deal will also play a role to make it good for Tech Mahindra shareholders. “The pricing of the private equity funding would be critical and it needs to be seen if it is at the subsidiary level or the company level,” said Dua.