Visesh Infosystems Ltd is yet another company which is cashing in on the investor penchant for software issues. Notwithstanding the amazing capital gains provided by even new players in the field, a long-term investor should always be cautious while investing in IPOs of companies with no credible track record. Nevertheless, from a short-term investment perspective, one can still consider investing in this IPO. Although Visesh Infosystems has been operating in the field of software for the past 10 years, the company's track record till fiscal 1998 is hardly impressive.Till fiscal 1998, the company was operating at a very low net profit margin (8 per cent for fiscal 1998). This shows that the company has been operating at the low end of the value chain. However, for the nine-month period ended June 30, 1999, the company staged a dramatic turnaround in its financial performance (unaudited results). On a marginal growth of 4.9 per cent in sales to Rs 7.68 crore, net profit zoomed by 197 per cent from Rs 58.7 lakh to Rs 1.74 crore. The annualised EPS has improved from Rs 5.39 in 1997-98 to Rs 7.01 for 1998-99. The EPS of Rs 7.01 discounts the offer price of Rs 50 by a multiple of 7.13 which is low compared to the industry average of 27.6.
For fiscal 2000, the company is projecting a substantial improvement in its performance. Domestic sales and services are projected to shoot up to Rs 8.72 crore, while exports are expected to rise to Rs 5.25 crore.
Contribution from educational services and other income is projected at Rs 1.4 crore.
On a total income of Rs 15.37 crore, profit before depreciation and tax is targetted at Rs 5.73 crore. Net profit is projected at Rs 4.07 crore and on an expanded equity of Rs 10 crore, EPS for fiscal 2000 works out to Rs 4.89.
This discounts the offer price of Rs 50 by a multiple of 10.22. Visesh Infoystems is the first major venture of its promoters. Interestingly, the company has issued 4.79 crore shares at Rs 10 to promoters against the public issue offer price of Rs 50 between April and August 1999.
The company is mainly engaged in providing ERP solutions and has recently entered into e-commerce services, IT consultancy services, on-site and off-shore projects and educational services in ERP, e-commerce and medical data transcription. The company's two ERP products are Businessoft and Businesspro. For e-commerce, the company is working on a web which will enable the complete ERP product and to give solutions to the existing customers on the internet based applications.
The company has now drawn up a Rs 15.75-crore project for establishing off-shore development facilities in Gurgoan; expansion of existing development facilities and marketing operations; expansion of its existing educational school at Bangalore and setting up new schools in Delhi, Mumbai, Chennai and Hyderabad; and setting up full-fledged branch offices in USA and Canada. The entire project cost is being met through the current issue (including promoters' contribution).
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.