Incidentally, all the four new listings of the week are from the IT sector. Expectedly, aided by an improved market sentiment, all the new listings opened their accounts not less than their offer prices. Nevertheless, after listing, all the four scrips have turned weak. Whereas the prices of two IPOs, which opened far higher than their offer prices, have now narrowed down significantly, the other two, which opened slightly above their offer prices, are currently quoting below their offer prices.

Of the four IPOs listed this week, the Bangalore-based Mascot Systems Ltd has proved to be more investor-friendly. Mascot, lead-managed by Kotak Mahindra Capital, has been able to list its share in just 38 days after the issue closing, while the New Delhi-based KCC Software Ltd lead managed by PNR Securities, another Bangalore-based Cerebra Integrated Technologies Ltd lead managed by Canara Bank and the Hyderabad-based Baron Infotech Ltd lead managed by Karvy Investor Services took 66 days, 64 days and 53 days respectively.

The high-profile Mascot which tapped the market only last month through the `book building' route had initially indicated a bid price band of Rs 480 to Rs 580, with a maximum indicative offer price of Rs 870. But, apparently disappointed by the lukewarm response from the investors, the company eventually settled for the lowest indicative price of Rs 480. Whereas Mascot's book built portion of 22.5 lakh shares was subscribed around 8 times by 2420 large investors, the fixed price portion of 7.5 lakh shares was subscribed just 1.23 times by 4139 small investors. Mascot closed its issue on May 4 and completed the allotment in two weeks, on May 18.

Ironically, the company took more time (24 days) for listing!

The Mascot scrip was simultaneously listed on all the three exchanges - BSE, NSE and Bangalore this Monday. While the price fluctuated between Rs 599 and Rs 472 on the country's premier exchange, BSE, the scrip was placed on a higher band of Rs 650 and Rs 500 on the regional exchange at Bangalore, albeit with minuscule volume. Next day, as the scrip turned weak, price fluctuation too narrowed down. Currently, the scrip is placed around Rs 500 which is just about 5% more than the issue price of Rs 480. Does this make the scrip attractive for investment?

In fiscal 1997, Mascot could not post a net profit of even Rs 5 lakh on a turnover of over Rs 8 cr. In the next year, profit shot up to Rs 1.4 cr on a turnover of Rs 16 cr. For fiscal 1999, profit amounted to Rs 2.25 cr on a turnover of Rs 26 cr. This gave an EPS of just 94 paise, which discounted the offer price of Rs 480 more than 510 times! For fiscal 2000, Mascot has projected a profit of Rs 4.21 cr. This would yield an EPS of Rs 1.55 on the post-issue capital of Rs 10.80 cr which discounts the current market price of Rs 502 nearly 324 times.

Of course, for the current fiscal, Mascot projects a whopping profit of Rs 49.54 cr. This may give an EPS of over Rs 18 which would discount the current market price only about 27 times. Though Mascot's projections may perhaps justify investment in its scrip even at the current market price, one cannot be too optimistic about the scrip's future, as the promoters have too many companies worldwide in the related line of software business.

Further, one would not rate high a management which changes the face value of the share on the eve of the issue, apparently to make the offer price attractive. Moreover, if the parent company, whose profit was many times over even the turnover of the Indian company, were to be discounted by Nasdaq only about 50 times its 1999 earnings in February this year, what discounting are we expecting for Mascot on the Indian bourses? The second new listing of the week, KCC Software disappointed investors not only in terms of number of days taken for listing, but also in terms of market performance. KCC, which offered public shares at par, opened its account this Tuesday at Rs 11.45 on the regional Delhi Stock Exchange with a solitary trade of 100 shares.

But, in the next two days, the scrip has lost almost 30 per cent! Of course, from a company, which has failed to pay the dues to even its ad agency and software supplier, where the promoters' stake including friends and associates is only 31.25%, and whose promoters are yet to prove their worth, what else can one expect? The third new listing of the week, Baron Infotech, has some what proved investor-friendly. Baron has listed its share on its regional Hyderabad exchange this Tuesday, that is, within 53 days after the issue closing. According to BSE sources, the scrip will be traded on BSE next week. Baron, which offered public shares at par, opened its account on HSE at Rs 36. However, it closed the day lower at Rs 20.

Currently, the scrip is placed around Rs 23 which gives a capital appreciation of 130% to the public inves tors. Baron's current profitability (Rs 14 lakh for 9 months up to December 1999) is too small to adequately service its enlarged equity base of Rs 10.20 cr. Also, of the promoters' stake of 74.5%, only 20% is locked in for three years. In other words, in the absence of a decent bottom line, the price will largely depend on the mood of the promoters' associates!

The fourth new listing of the week, Cerebra Integrated, began its muhurat on Wednesday at the issue price of Rs 60 on its regional Bangalore exchange. But, it couldn't hold the price thereafter. Even after 65 days, the scrip is yet to be traded on the Ahmeda bad and Calcutta stock exchanges.

Interestingly, Cerebra, which is hitherto predominantly a hardware company, received an overwhelming response of 5.36 times its Rs 8.88 cr issue. With a historical EPS of not even one rupee on the post-issue capital of Rs 5.92 cr, the offer price of Rs 60 can hardly be sustained on the trading floor. More over, with associates and friends holding more than 34% of the equity free from lock-in, how can one expect the price to move up without a bottom line to support?

-- (Arranged by Investar - The Aarthik News & Research Group) [E-mail feedback to:investar@bol.net.in (or) fernando@bol.net.in]