The company made a debut on the bourses on Monday (August 14) when most of the media and software stocks witnessed high volatility. In tune with the market movements, the stock opened at Rs 110 (which was also the day's high) and touched a low of Rs 83. Later on, the stock recovered some of its lost ground during the day to close at Rs 102.

The counter witnessed hectic activity during the day and around 2.2 lakh shares were changed hands. Even in this market, the company commanded a marginal premium on listing, which seems good for investors. In fact, compared to other media IPOs, Padmalaya's Rs 25-crore IPO (25 lakh shares) was decently priced. Probably, this was the reason the counter witnessed buying activity when the stock touched a low of Rs 83 during the day. It may be recalled that the company had tapped the public when stock markets were in a dull mood, except for some brief rally.

The IPO had been oversubscribed by 4.5 times. Even at Padmalaya's listing, the market sentiment is on a low-ebb. If Padmalaya's projections are anything to go by, the company will end up the fiscal 2001 by a net profit of Rs 25.67 crore. On expanded equity base of Rs 10 crore, this gives an EPS of as high as Rs 25.67. The future EPS discounts the current market price of Rs 102 by a multiple of only 3.97. The company is confident of achieving the profitability projections. Even if the company slips by a small margin on profit targets, the discounting will still look attractive. Hence, the stock has the potential for an upmove.

Padmalaya is currently in the process of setting up a Rs 54.25-crore project. It is enhancing facilities for higher volume of TV software production integrated studio for 2D/3D animation projects, design shop for web ads and film trailors at a total cost of Rs 17.75 crore.

The company is also tying up with Penta Media for consultancy services, supply of software and training to set up 2D/3D (total deployment Rs 3 crore) and is setting up an integrated television software studio at a total cost of Rs 4.5 crore. Around Rs 5 crore is earmarked for procurement of films for library. Of the issue proceeds, Rs 19.8 crore is going towards working capital requirements.

For the 12-month period ended September 1999, the company recorded a net profit of Rs 3.63 crore on turnover of Rs 17.82 crore. For the four and half month period ended February 2000, the company recorded a net profit of Rs 2.61 crore on turnover of Rs 7.8 crore.

The company is a fully integrated television software and content provider. The company has projected a total turnover of Rs 70.29 crore and net profit of Rs 25.67 crore for fiscal 2001.

The shares are listed on the stock exchanges of Mumbai and Hyderabad. The IPO was lead managed by Karvy Consultants. The issue opened for subscription on May 31 and closed on June 6.