On changing the name, the price of these shares have already shot up significantly, though their financial performance may not support the price line. Perhaps, the Ahmedabad-registered Sunstar Software Systems Ltd (Sunstar) may be an exception here. A change in the company's name has coincided with a substantial change in its profitability with EPS zooming to almost thrice its face value.

Nevertheless, the share price is still pathetic at nearly just a half of its annualised earnings. For a better part of 1997, the Rs 10 paid-up scrip recorded a price of just around one rupee though the volume had fluctuated from as low as 1,000 shares to as high as 1,17,200 shares! In early last year, the volume dropped down to its minimum lot of 100 shares.

And, after March 1998, the scrip disappeared altogether from the BSE screen. But, suddenly, in September 1998, the scrip resurfaced, quoting with a wide band of Rs 4 and Rs 10, and the volume too changed into thousands. After peaking at Rs 12 in the last week of September 1998, the price once again started receding, though the volume still remained mostly in thousands. For the whole month of December 1998, the scrip once again disappeared from the scene. During the first fortnight of the new year, the scrip once again witnessed a downward trend though the daily volume was still hovering between 4,000 and 12,600 shares.

Thus, at the close of the first fortnight, the scrip was placed at Rs 6.50 with a volume of 5,000 shares. Since then, the scrip has been moving northwards on the back of heavy volumes. Interestingly, the initial build-up during the second fortnight of January 1999 was followed by the company's incredible third quarter results which gives an annualised EPS of Rs 24.80. Alongwith the 9-month results, the board also considered an interim dividend of 10 per cent on January 22 which was widely published on January 28.

The `epoch-making' latest working did attract a lot of activity in Sunstar's counter and, on February 2, its volume hit a peak of 2.47 lakh shares. On the next day, February 3, too the scrip was in a `buy mode' with a volume of around 2.36 lakh shares. On February 4, the volume had substantially dropped down to 29,500 shares but, the northward march still seems to be unabated. If market grapevine is to be believed, the present price is on its course to double soon.

Is Sunstar really worth that much? The current market price of Rs 14.60 discounts Sunstar's latest annualised earnings of Rs 24.80 by only 1.7 times which may, perhaps, look highly attractive. Nevertheless, the company's fundamentals speak otherwise. The company was originally promoted as Ojas Leasing Ltd. When the `Aashi Group' took over, its name was changed to Aashi Leasing & Finance Ltd.

Only recently, its name was once again changed to the present one. Today, even though Dhaval Jhaveri of the Aashi group-fame still continues to be the chairman of Sunstar, he claims to have no stake in the company. If it does not belong to the Aashi group, who then controls the company? Strangely, while the company's registered office and its management are based at Ahmedabad, the board of directors have declared the latest working results from Mumbai! According to Dhaval Jhaveri, Sunstar's board chaired by him met at his "private office" in Mumbai and considered the company's latest results as well as the interim dividend.

The most interesting aspect is that Sunstar's chairman doesn't know how the company's equity capital, which was at Rs 4 crore in March 1998, shot up to Rs 15 crore in the first half of the current fiscal! "After resigning from the company's board in 1996, I rejoined as chairman only in August 1998," he justifies. Holding the company's official board meeting at a private office of its `non-executive chairman' far away from the company's registered office at a different location and the chairman's ignorance of the substantial increase in the company's equity during the year are good enough to judge the caliber of any company.

Coming to Sunstar's current working, though one is yet to know full about its product details, the company has reported a net profit of Rs 27.90 crore for the 9-month period up to December 1998 against an equity base of Rs 15 crore. Last year, the company had just doubled the performance of its first half. Interestingly, in the current fiscal too, the third quarter amounts to exactly a half of the first six month working.

Without any popular products to boot, how Sunstar, which is a nascent to the software industry, could earn so much profit? The company's unabridged balance sheet can alone answer this question. History has shown very often that in the stock market, every boom is almost invariably followed by a bust. One only hopes that the uninitiated investors remember this cardinal principle of investing. Meanwhile, let us hope that the regulators and the exchanges concerned are vigilant to the unusual upsurge in Sunstar. Or, will they wake up as always only when the market manipulators have made good their escape after emptying the savings of many?

(Arranged by INVESTAR -- The Aarthik News & Research Syndicate)