It’s been a roller coaster ride for the shares of Satyam Computer Services, now known as Mahindra Satyam, over the past month ahead of the company’s release of its first financial statements in two years.
The stock of the beleaguered-but-recovering software company has traded in a band between 79 rupees ($1.75) and 113.80 rupees on the Bombay Stock Exchange in the month since Aug. 27 and has surged 17.2% in last month. In comparison, the 30-stock benchmark Sensex advanced 10.2% in the same period.
The company couldn’t declare results for the past two fiscal years after its founder, B. Ramalinga Raju, confessed in January 2009 that the firm’s balance sheets were a sham, and that he had been overstating the profits of the Bombay and New York-listed firm for years to the tune of more than $1 billion.
On Wednesday, the company will disclose results for the fiscal years ended March 31, 2009 and March 31, 2010. The company is also in the process of restating its accounts for the past six to seven years, providing the first accurate look at the firm’s performance in years.
The firm’s American depository receipts took a pummeling on Friday, ending 24% down, after the Hyderabad-based company—once India’s fourth largest software exporter—said last week that it plans to de-list from the New York Stock Exchange as it expects to miss the Oct. 15 deadline to file financial statements with U.S. regulators.
On Monday Satyam closed down 3.7% at 96.45 rupees ($2.14) on BSE, while the benchmark Sensex ended 0.4% higher.
“Generally the market should be a bit wary as not too much is known about the performance,” said a Mumbai-based analyst, who asked not to be named.
Citigroup expects Satyam to post net profit of 6.18 billion rupees ($136.9 million), or 5.30 rupees ($0.12) a share, on revenue of 52.14 billion rupees for the 2010 fiscal year ended March 31, with earnings before interest, tax, depreciation & amortization, or Ebitda, margins at 13%.
The bank expects this fiscal year net profit at 9.15 billion rupees or 7.80 rupees a share, on revenue of 59.11 billion rupees, with Ebitda margins not more than 19%.
Market players expect stock to be range bound till the results are declared.
The recent run-up in the shares of the company is due to “over optimism” and expectations of a double-digit margin performance, said another analyst.
“I don’t see any fundamental trigger for the stock to go up from these levels,” he added.
The company will also report results for this year’s April-June and July-September quarters on or before Nov. 15.
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