Pragnya Software Systems: Below Average

Score: Below Average

Suresh Krishnamurthy

The initial public offer (IPO) of Pragnya Software Systems at Rs. 10 per share can be avoided by investors. The offer does not hold potential to generate returns commensurate with the risks involved in the investment.

What the company says: Pragnya started software development in 1991 and has been concentrating on the domestic software market.

The company has executed several projects for the Defence Laboratories in Hyderabad, Library Management Systems, Hospital Management, Automation of gas agencies and Online examination System. It is also developing computer-based tutorials for the education market.

Pragnya is expanding into e-commerce solutions and is setting up a software development centre at Hyderabad.

The project cost is Rs. 1.55 crores, financed entirely with equity. Pragnya recorded revenues of Rs. 0.73 crore and profits of Rs. 0.18 crore for April 1, 1999 to March 6, 2000.

Prospects: Pragnya does not have a track record that inspires confidence. Its experience in executing software projects in the domestic industry is not significant, given the scale of existing operations of the company. In this backdrop, the risks involved in scaling up the operations to a level that would generate a decent profitability, appear considerable. Also, its focus on a number of areas such as software development, e-commerce and development of special products, does not bode well. In this backdrop, investors can avoid the offer.

The offer closes on August 21 and the lead manager is Aryaman Financial Services.