An interesting trend has been witnessed in most of the software initial public offerings (IPOs) which have hit the market in the past few months. Most of the companies have opted to initially list their equity shares only on regional stock exchanges. This, according to brokers, has to be watched for as listing shares only on regional exchanges restricts liquidity and could lead to price manipulation.

Helios plans to first list its shares on the Chennai, Hyderabad and Ahmedabad bourses. According to the draft offer document, the company intends to get its shares listed on the Bombay Stock Exchange in due course of time.

Helios' IPO, aggregating Rs 10.82 crore, is primarily aimed atpart-financing the expansion of its software consulting and knowledge divisions. At an eleven-month annualised earnings per share of Rs 4.09, the price-earnings multiple works out to 12.22 which compares favourably with the other software IPOs that have hit the market recently.

According to the draft issue prospectus filed with Sebi, of the estimated total project cost of Rs 12 crore, apart from the IPO proceeds, Rs 1.1 crore is being met through internal accruals. The entire project is scheduled for completion in November 1999.

The Helios public issue is being lead managed by UTI Securities. In an otherwise dry primary market, this is the seventh software IPO in the last six months. The recent boom in software IPOs began with the successful issue of Sonata Software. The Rs 22.7-crore offer in December 1998 was received well by the investors and the stock, post-offer, has done well on the bourses.

Of the total shares offered, 6.97 lakh shares are reserved for banks, financial institutions and mutualfunds, and another 2.16 lakh for employees of the company. The balance 12.50 lakh shares is on offer to the public who, post-offer, would hold 25 per cent in the company. While the banks/FIs/MFs would have a 14 per cent stake, post-offer, the employees' stake will be at 4.32 per cent. The promoters' holdings in the company will get reduced to around 52 per cent from the present 91.62 per cent.

For the 11-month period ended February 1999, Helios earned a net profit of Rs 1.06 crore against its fiscal 1998 net profit of Rs 6.94 lakh -- an increase of over 15 times. On the turnover front, however, the growth was 72 per cent to Rs 7.05 crore during fiscal 1999 against Rs 4.11 crore during fiscal 1998. The company has a constant dividend payment record since its incorporation in 1991.

Currently, Helios is focussing more on software development and training. It has an exclusive arrangement for academic backup and technical guidance from IIT, Chennai.

According to the draft offer document, the percentage ofrevenue accruing to Helios from its software division has shown substantial improvement over the last four years. For the 11 months ended February 1999, the share of the IT division at Rs 4.53 crore was more than 60 per cent of its total revenue which is pegged at Rs 7.05 crore. Over the next couple of years, the company plans to completely shelve its non-software business and concentrate on net centric businesses like Internet and Intranet.

According to the projections made in the draft offer document, for fiscal 2000 it expects to earn a net profit of Rs 4.38 crore from a total income of Rs 17.13 crore.