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Swap Satyam with Infosys: KRChoksey
KRChoksey Research advises investors to swap Satyam Computer Services with Infosys Technologies. Ramalinga Raju, Chairman of SCS resigned and admitted to manipulating and inflating the company earnings, as well as balance sheet items.
Ramalinga Raju, Chairman of SCS resigned and admitted to manipulating and inflating the company earnings, as well as balance sheet items. After adjusting for these items, we find the book value of the company to be negative as highlighted below. It is believed that the failed acquisitions were aimed at replacing fictitious assets.
Given the current state of the business and the outlook after the exodus of top management, we do not see any immediate upside in the short run. The possibilities of an improvement in business prospects postacquisition are now unlikely given the true nature of the company financials. Even after the verification, restatement of financials and resolution of critical financial and regulatory issues, it is extremely unlikely that we will see a significant improvement in the company's business prospects or client confidence. We therefore suspend coverage of the company, and advise investors to swap their holdings with Infosys.
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