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Satyam stock may fall to Rs 20

January 07, 2009 21:06 IST

Troubled IT firm Satyam [Get Quote] Computer is likely to witness a free fall following its chairman Ramalinga Raju's resignation and his admittance of a major accounting fraud, while analysts expect the scrip may plunge to Rs 20 levels in coming days.

"Book value post recent disclosure could be potentially negative. Do not rule out stock falling to sub Rs 20 levels," brokerage firm Emkay Research said in its report on Satyam.

Marketmen said that the fundamentals of the company have been shaken completely and the malpractices in the financial disclosures has shattered investor confidence.

"This is a big blow for the investors, employees and anybody associated with the company. It is also a shocking news for the FIIs and majority of them will exit the stock," Geojit Financial services [Get Quote] Head of Research Alex Mathews said.

The scrip on Wednesday plunged nearly 78 per cent to settle the trade at an all-time low of Rs 39.95, on the BSE.

"The stock is likely to go lower even further as it closed below the Rs 49-level, which it had last witnessed in March 1997," Mathews added.

Analysts believe that the sell off in Satyam would trigger buying in the stocks of rival IT majors leading to their scrip moving up.

"Going by the current trend, Infosys [Get Quote] and Wipro [Get Quote] would be a good buy than the company whose management is involved in financial malpractices," Ashika Stock Brokers Research Head Paras Bothra said.

"The scrip can witness levels down to as much as Rs 20. The company was operating at a margin of three per cent, the lowest by any IT company. It was doing business on cost basis.

Some more sell offs and downturns are in store for future," Arun Kejriwal of Kejriwal Research and Investment Services said.

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