Syntel shares tell story?
By Bala Shah

Over the last ten months, Techgoss had published a series of exclusive reports giving details of all that was happening inside the BPO, KPO and IT divisions of Syntel.  One report showed how that in the recent past Syntel BPO was overly reliant on couple of key clients.  Techgoss had also reported on the exit of the CEO and senior HR people as well as recent salary hikes.

On June 4, 2010, Techgoss had published an article  that tech giant IBM had held a number of meetings with Syntel with the intention of buying the company.  According to reliable sources, key players from Syntel and IBM have held a number of meetings to discuss synergies.

Regular readers of Techgoss are well aware that a large number of our articles are crowd sourced.  People send in tips, story ideas and even articles. Many of our contributors have full times jobs in IT-ITES, and so prefer using a pseudonym. 

On August 1, 2010, one of our astute, market savvy readers, who prefers anonymity, sent us the following query

“
If Syntel is potentially to be taken over by IBM then why these biggies of Syntel are selling their stocks?

Syntel Inc. has a market cap of $1.73 billion; its shares were traded at around $41.71 with a P/E ratio of 14.6 and P/S ratio of 4.1. The dividend yield of Syntel Inc. stocks is 0.6%. Syntel Inc. had an annual average earning growth of 15.6% over the past 10 years. GuruFocus rated Syntel Inc. the business predictability rank of 2-star.

SYNT is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC and Jeremy Grantham of GMO LLC.

Directors and Officers Recent Trades:

Buy:  Director Thomas Doke bought 5,000 shares of SYNT stock on 06/10/2010 at the average price of 33.96. Thomas Doke owns at least 13,986 shares after this. The price of the stock has increased by 22.82% since.

Sell:  Director Paritosh K Choksi sold 2,635 shares of SYNT stock on 07/27/2010 at the average price of 42.77. Paritosh K Choksi owns at least 39,748 shares after this. The price of the stock has decreased by 2.48% since.

Sell:  President, BU - Bkg & Fin  Rakesh Khanna sold 11,575 shares of SYNT stock on 07/27/2010 at the average price of 42.36. Rakesh Khanna owns at least 14,425 shares after this. The price of the stock has decreased by 1.53% since.

Sell:  Director Paritosh K Choksi  sold 5,000 shares of SYNT stock on 07/27/2010 at the average price of 43. Paritosh K Choksi owns at least 34,748 shares after this. The price of the stock has decreased by 3% since.

Sell:  Vice President, Sales  Lakshmanan Chidambaram sold 6,000 shares of SYNT stock on 07/27/2010 at the average price of 42.86. Lakshmanan Chidambaram owns at least 26,850 shares after this. The price of the stock has decreased by 2.68% since.
“

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(Techgoss had published the following article on June 4, 2010)

IBM poised to buy Syntel?
By Pulkit Sharma

Over the last eight months, Techgoss had published a series of exclusive reports giving details of all that was happening inside the BPO, KPO and IT divisions of Syntel.  One report showed how that in the recent past Syntel BPO was overly reliant on couple of key clients.  Techgoss had also reported on the exit of the CEO and senior HR people as well as recent salary hikes.

International markets are buzzing with the news that technology giant IBM is close to acquiring Syntel a NASDAQ listed IT, BPO and KPO Company. Started by Bharat Desai, an IIT B alumnus in 1980 with a capital of only $2,500, Syntel quickly grew into a global organization riding on Bharat's dynamic personality and his perseverance with North American clients. Syntel currently provides services to North American, European as well and some Indian clients.

Syntel is a darling of the stock markets in the US with a strong balance sheet and zero debt providing profitability figures year after year. Its stock is currently trading at $ 34.7. Syntel has built vast development centers in Pune and Chennai. Even though the human capital in the organization has undergone turmoil in the recent past - the company has some solid clients in the banking and financial services and insurance sectors. The company's CFO and CEO held marathon sessions with the IBM team to arrive at a much acceptable valuation figure. Insiders say it would be in the $800 million - $ 1 Billion range.