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| Brokerages suspend coverage of Satyam stock |
| Press Trust of India / Mumbai Jan 07, 2009, 18:22 IST |
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A host of domestic and foreign brokerage firms, including Credit Suisse, Religare and Angel Broking, today suspended their coverage of Satyam Computer shares, after the company's chairman Ramalinga Raju resigned and admitted of a major accounting fraud.
Most of the brokerage firms, in their research notes, stated that they were suspending the rating and target price on Satyam as the company's true book value is not known, while the revenues and profits are also not reliable.
"We suspended today equity research coverage of this stock, following the announcement by Satyam, as the current financials of Satyam cannot be relied upon, we are unable to issue further investment advice on this stocks," global brokerage firm Credit Suisse said.
Religare's Hitchens Harrison said, "Ramalinga Raju's disclosures today, regarding cooking up accounts of Satyam, are shocking and overwhelming... With realisation that the cash is rather non-existent and the revenues and profits too are over-stated to a large extent takes away any fundamental argument in favour of Satyam."
Reiterating its earlier negative stance on the company with 'sell' recommendation, Religare stated that its was discontinuing its fundamental target price on the company.
Raju resigned today after admitting of a major financial wrong doing, and saying his last-ditch efforts to fill the "fictitious assets with real ones" through Maytas acquisition, failed.
"As book position of the company is not clear due to the fraud in accounting practices, we will stay away from any analysis of the stock," SMC Global VP Rajesh Jain said.
Further, Angle Broking and Emkay Research have also said that in light of these developments, they are discontinuing the coverage on the stock, with immediate effect.
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