Notwithstanding the software boom, investment in this IPO even for short-term gains may prove risky. With the software IPO rush in the primary market expected to continue, retail investors will get more opportunities for parking their money in low-priced, but better issues.

Incorporated as Fortune Office Systems Pvt Ltd on July 24, 1990, the Hyderabad-based company was earlier engaged in trading. Lured by the growing software craze on the stock markets, the company rechristened itself into Fortune Informatics Ltd with effect fromMarch 4, 1999. In 1997-98, the company made a foray into design, development and marketing of software products and implementation of projects for the domestic market.

The Andhra Pradesh government is a major client of the company. The company offers turnkey software solutions to the state government and has implemented Papyrus for CARD (computer aided administration of registration department) project successfully in 214 sub-registrars offices of the state.The company seems to be heavilly banking on the profitability projections.

However, the projections, appraised by the Andhra Pradesh Industrial Development Corporation which has also advancing a term loan, do not seem to be convincing. Without any firm orders on hand, the company is expected to make a major turnaround in its fortunes in the current fiscal as well as the next fiscal. Against an income of Rs 4.46 crore for fiscal 1999, total income is projected to jump by 76 per cent to Rs 7.86 crore in fiscal 2000.

Similarly, net profit is projectedto zoom by 1035.7 per cent from Rs 14 lakh to Rs 1.59 crore. For fiscal 2001, the projected net profit is Rs 2.05 crore on a total income of Rs 9.5 crore. On an expanded equity base of Rs 7.16 crore, EPS works out to Rs 2.22 for fiscal 2000. This discounts the offer price of Rs 10 by a multiple of 4.5. The company also promises to give a dividend of 15 per cent and 20 per cent for these two years, respectively.

The company has a very limited client base and a major portion of its business comes from the state government of Andhra Pradesh. The company's performance in the field of software is reflected in fiscal 1999 results.

The company recorded a net profit of Rs 14 lakh on a total income of Rs 4.46 crore. This gives a very low net profit margin of 3.13 per cent. At present, the company is implementing a Rs 6.99-crore project, which is apprised by APIDC. The Rs 2.1 crore IPO is to part-finance the cost of expanding its software development centre, set up a overseas marketing office at Chicago, USA, andmeet working capital requirements.

The means of finance include promoters' contribution of Rs 3.99 crore, public issue proceeds of Rs 1.8 crore and a term loan of Rs 90 lakh from APIDC. The company is promoted by Y V Prasad, C K Shastri and B Sunil Kumar who have no prior exposure to the feild of software.