Tech Mahindra will benefit from the acquisition of Satyam Computers. The reason is that, earlier Tech Mahindra was highly dependent upon British Telecom for its business. Now, after the acquisition, TM will get a chance to enter BFSI segment by acquiring Satyam's clients, giving brighter outlook to it's business.
Also, for FY 08 - 09, TM's EPS was Rs. 81. Satyam's EPS for FY 10 is estimated to be Rs. 4. So even if we do conservative calculation, TM's EPS for FY 10 can come to around Rs. 85 or so.
Till now, TM was considered Midcap IT stock & has got PE of around 6-7. However, now TM has joined top 5 club, becoming large cap IT company, it's PE could expand to around 20 as that of Infosys, TCS etc.
At current price of Rs. 722, it is trading at a forward PE of 8.5.
So given all these factors, one can buy TM on dips for the period of 2-3 years for excellent returns.
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