A day after Satyam Computer Services surprised market watchers with better-than-expected numbers, five brokerages

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are bullish on Satyam and its new owner Tech Mahindra, while one broking house, Citi, retained its ‘sell’ call on both the companies, saying “Satyam disclosures are not audited” and “hence not reliable.”

JP Morgan, India Infoline, Sharekhan, Anand Rathi and Angel Broking said they are positive on both the companies.

JP Morgan has a target price of Rs 100 on Satyam while Angel Broking has a target of Rs 845 on Tech Mahindra. India Infoline has set a target price of Rs 758 on TechM. Sharekhan is also bullish on L&T, which owns 11.5 per cent stake in Satyam.

On Wednesday, shares of Satyam closed at Rs 73.50, up 9.95 per cent from the previous close, hitting upper circuit for the second consecutive day as BSE Sensex gained 2.25 per cent. Tech Mahindra closed at Rs 784.85, up 5.46 per cent, while L&T closed at Rs 1,633.65, up 3.8 per cent.

“The stock price of Satyam gained due to better-than-expected numbers disclosed in Tuesday’s filing,” said Tarun Sisodia, director and head of research at Anand Rathi Financial Services.

“We still have no feel for Satyam’s margins as audited financials are not available. The margin range of 3 per cent (as per Raju’s letter) to 16 per cent (margins in February as per disclosures) is very wide. Tech Mahindra’s core business continues to be under pressure – with significant pressure on revenues from BT,” said the report from Citi, which has a ‘sell’ guidance on Satyam.

Sharekhan says the numbers are also positive for the L&T stock. “At the present market price of Rs 66.8 (of Satyam), the portfolio loss for L&T would be about Rs 110 crore. Moreover, L&T, as a prudent measure, has already provided Rs 186.3 crore with respect to its investment in Satyam. With Tuesday’s disclosures, the outlook on Satyam seems to be much better and based on the present estimates, the stock seems to be quoting at attractive valuations. With improved sentiments in the market, the gain in Satyam’s stock will also come as a positive for L&T, which might write back some portion of the earlier provision, as its portfolio loss eases,” the report said.

On concerns, an analyst report by Angel Broking said, “Even as the financial numbers and the overall picture reflected in Satyam appear very encouraging for Tech Mahindra, we believe the challenges are not yet over as far as the former is concerned. The law suits, in particular, will continue to remain a thorny issue, chief among them being the Upaid suit for a sum of $1 billion and also the US class action law suits.”