A simple stock idea that can give good returns over the long haul

Friends, trust me, no one can give you multi bagger stock ideas off and on, every day, every week. If somebody tells you that he/she can do so, then that person is a master liar gifted with a crooked mind, a crooked heart and in all probability the stock ideas could be equally crooked backed by crooked promoters who churn out crooked figures and so on and so forth.

Now, the crooked person who was once a RAJA is no more a RAJA but the company that he was running in a crooked way has now a new owner who is as straight as straight can be – you guessed it. The name of the company is Satyam which is now owned by one of the most ethical entrepreneurs that’s Mahindra.

“Customer centricity, high standards of corporate governance, unimpeachable ethics form the cornerstones of the Mahindra Group.” That in short are the credentials of the new owner. Mahindra Satyam is now part of the $7.1 billion Mahindra Group, a global industrial federation of companies and one of the top 10 industrial firms based in India.

Now, please write this down in letters of Gold – The Stock Markets is one place in the world that can fleece a person to death and at the same time its one of the coolest place in the universe where one can make a killing and who gets killed and who makes a killing depends on who is alert and who is not.

And those who are alert would have realized that in a highly volatile market where even a company like SKS Microfinance was thrashed by the bears has now started to be embraced by the bulls. A good company becomes bad, ugly ducklings can get uglier and dud stocks can rise to great heights. Anything is possible in the stock markets. Even if a great company like Great Offshore is being battered then there has to be a reason for the battering. And even if Mahindra Satyam is going downhill, there has to be some logical reason for the stock to reach a low point. Satyam Computer Services Ltd which was quoting around Rs.120.85 on 14 January 2010 has today touched a 52 week low of Rs.68.15 per share. Agreed, every stock will have a divergent view at any point in time – some may be bullish and some may be bearish, some were bullish earlier but have now got more bullish now. Just like the FII’s who had a 9.05 per cent stake in June 2010 have now hiked their stake which stands at 9.87 per cent and the DII’s have reduced their stake from 4.62 per cent to 3.29 per cent during the stated period.

On a consolidated basis, Revenue for FY11Q1 and Q2 was Rs 1,248 Crores and Rs 1,242 Crores respectively. PAT for FY11Q1 and Q2 was Rs 98 Crores and Rs 23 Crores respectively.

Vineet Nayyar, Chairman, Mahindra Satyam, has this to say about the Quarterly results : “The announcement of Quarterly results is an important first step towards building a high-growth business. The synergies with M&M and Tech Mahindra are quite visible and we are seeing definite traction in our joint go-to-market strategies.”

And CP Gurnani, CEO, Mahindra Satyam, said, “Our performance over the last two quarters clearly reflects the stability that has been brought in. We have retained our traditional strengths and leadership in areas like Enterprise Business Solutions (EBS) and Integrated Engineering Services (IES). Our uninterrupted service delivery has helped us to expand on existing relationships, resulting in multiple order renewals.”

I personally feel that under the able and dynamic leadership of Vineet and Gurnani, the company is going to go places- there is no doubt about it. The only thing is that it will take some time – you need patience and lots of it. But, rest assured you will someday in the not too distant future be rewarded for your patience.

So, what are you waiting for. Don’t you wish to buy a small pie of Satyam Mahindra? Rest assured, before the merger or after the merger with Tech Mahindra, money you will certainly make provided you get in now or on more sharper downward correction. Or, did I hear that you want the CMP of Rs.68.15 to go down by 68.15 per cent and then you will think of buying. Then forget it –you may never be able to buy at that price. In case you do, let me know and I’ll take out for dinner at Taj Intercontinental, Hyatt Regency, Sheraton or Le Meridian, choice being yours.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd