I have been receiving serious queries from friends, relatives, acquaintances, clients and associates on Satyam and Larsen…. In light of what has happened and is happening and will happen should we Buy, Sell or Hold Shares of these two Companies !?
Really Ironic and Amusing that as Larsen averages a rising Satyam to save face and reduce it’s high holding cost, you want to average a falling Larsen for the same reasons !
Let’s take one Company at a Time
Along with it’s Promoter,Ramalinga Raju,Satyam’s Share Price too fell from Grace to levels of Rs 15 from Rs 225 in mid December… It’s been rising since, to Rs 52 today, as Larsen keeps making a strong pitch to buying it out and has already committed Rs 600 crores for a 12% Equity Stake
I had strongly warned you to sell off Satyam in my Dec 17, 2008 Blog at Rs 162 just a day after the Maytas proposal was announced by the Satyam Board and withdrawn overnight… stating that the share price will sink further and that Ramalinga Raju was a Goner !… This was much before he made his confession on January 7, 2009
At Rs 52, Satyam is reviving with Larsen support… If you wish to Hold or are even contemplating Buying Into Satyam, then be cautioned that you have to take the risk like Larsen is doing, in assessing that Satyam will bounce back and the Hundreds of Millions of Dollars of Contingent Liability on account of Class Action Law Suits in USA will not materialise… Larsen seems confident… I don’t… Maybe they know something I don’t… refer to earlier Satyam and Larsen blogs for more on this !
So would I sell Satyam at Rs 52… At Rs 15, I would have taken the risk to Hold but now at Rs 52, I would begin offloading in tranches… but then again my risk profile may not be yours and you may be willing to take the Risk that Larsen is taking by Investing in Satyam
LARSEN & TOUBRO
It’s ,without any doubt,India’s Super Icon of Success and Scale…Of course it should be in your Equity portfolio
Problem is that most of you already hold this Share at a high Holding Cost of nearly Rs 2000… In the macro meltdown in 2008, Larsen had sunk towards Rs 800… However after it disclosed that it had purchased 3.95% Equity Stake in Satyam between December 23, 2008 and January 6, 2009 at an average of Rs 174 and after the Maytas Proposal Fiasco, It’s Share Price has sunk to below Rs 650 as market and shareholders clearly disapproved of this continuing ‘Mistake’ of Investing in Satyam.
So as Larsen Averages into Satyam, should you average into Larsen !?…. Don’t be in any Hurry, is my advice… Continue to Hold Larsen, It’s India Growth proxy…. Don’t sell Larsen… but don’t be in any hurry to average your High Cost Holding by purchasing more of Larsen… However if you are strongly inclined to Buy Larsen, then may I suggest, like I have advised selling off Satyam at Rs 52 in tranches, you could ease into purchasing Larsen in tranches too… in that don’t buy the full quantity of Larsen that you have planned in just one day…. In this way atleast you don’t miss the Averaging Boat in case Larsen does not fall significantly from Rs 650 levels.. and also benefit by buying some quantity at lower cost in case it does
Does that answer all of you satisfactorily… all those who were searching for some clarity on Investment in Satyam and Larsen ?
Cheers and Best of Luck too to all of you on your Satyam and Larsen Investment Strategy!