Tech Mahindra, Mah Satyam gain 3% each post merger

NEW DELHI: Shares of Tech Mahindra and Mahindra Satyam rose over 3% each on Thursday, a day after both the companies merged to carve out the fifth largest IT player listed on the Indian bourses in terms of revenue.

The merger with Satyam Computer will offer telecom-focused Tech Mahindra the much-needed diversity in solution offerings across verticals.

Dependence on telecom vertical was the major cause of Tech Mahindra’s slower sales growth given the lack of fresh investments by telecom players and ramp down by UK-headquartere?d BT, which is its biggest client.

The merger with Satyam will change Tech Mahindra’s brand identity from a telecom specialist to a multi-skill, multi-vertical, integrated global player, in line with top-tier players, including TCS, Infosys, Wipro, and HCL Tech in that order.

After the merger announcement on Wednesday, the stock prices of both rose enough to eliminate arbitrage opportunities. Long-term investors should stay invested considering growth prospects of the combined entity.

At 11:00 a.m., shares of Tech Mahindra Ltd were trading 3.6% higher at Rs 708.70. The stock has hit a high of Rs 711.80 and a low of Rs 679.05, so far in the trade.

Shares of Mahindra Satyam Ltd were trading 3.03% higher at Rs 80. The stock has hit a high of Rs 80.70 and a low of Rs 76.75, so far in the trade.