Has Tech Mahindra overpaid for Comviva stake?

Though the deal is expected to enhance TechM's positioning as a full services player for mobile network operators and help it gain share with key customers such as Airtel and Vodafone, it could be margin-dilutive

FP Editors|Dec 20, 2014, 12:03:54 IST

TechMahindra (TechM) may have made an overpayment of Rs 71.3 crore for the controlling stake in Comviva, Bharti Group's mobile value added services provider, brokerage Deutsche Bank has said in a research note.

"Based on a comparison with OnMobile (a close competitor of Comviva), Tech Mahindra seems to have overpaid Rs 71.3 crore for the controlling stake in Comviva. This translates to Rs 5.5 per share of Tech Mahindra," the note said.

TechM on Monday said it has agreed to buy a 51 percent strake in Comviva for Rs 260 crore.

Apart from billionaire Sunil Mittal's Bharti Group, WestBridge Capital, Sequoia Capital and Cisco Systems Inc (CSCO.O) are the other investors in Comviva, Reuters reported.

[caption id="attachment_459459" align="alignleft" width="380"] TechMahindra (TechM) may have made an overpayment of Rs 71.3 crore for the controlling stake in Comviv[/caption]

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