Vikram Software: Below Average

Score: Below Average

Suresh Krishnamurthy

THE initial public offer (IPO) of Vikram Software at Rs. 10 does not appear to hold the potential to generate returns commensurate with the risks involved in the investment.

What the company says: Vikram Software is engaged in software development for stock-brokers. It plans to expand its software development facilities, including e-commerce projects and its project training division.

The company proposes to develop Internet compatible software and also modify the existing software for brokers. Vikram is also engaged in developing e-commerce software for super markets and private insurance companies.

The software products developed by the company which are not copyrighted have been installed in over 1,200 stock-broking outfits. Vikram has also now developed VizaRD, a single-point solution for stock-broking transactions.

Vikram recorded revenues of Rs. 0.47 crore and profits of Rs. 0.21 crore for the year-ended March 2000. The project cost is Rs. 6 crores and is to be financed with equity of Rs. 5.18 crores and a term loan of Rs. 0.82 crore.

Prospects: The prospects for software companies catering to the domestic industry are not that bright, due to intense competition. The most competitive is the market for solutions for the finance sector. In this backdrop, the rate of growth in profit and sales is likely to remain constrained. As such, the valuations for this company at the stock market are also not likely to be comparable to even the valuations commanded by third-tier or fourth-tier It companies.

The company's track record also does not inspire confidence in the sense that the scale of operations have been modest. In this backdrop, investments in this IPO can be avoided by investors.

The lead manager is Aryaman Financial Services. The issue opens on August 22 and closes on August 31.

Industry class :Computer Software

Instrument type :Equity at par

Issue size :Rs. 1.50 crores

Application Amount :Rs. 10 per share

Issue opened :August 22

Earliest close :August 31

Lead managers :Aryaman Financial Services

Project cost :Rs. 6 crores

Debt:Equity :.1:1

Post issue equity :Rs. 5.18 crores

Listing :Chennai, Bangalore & Hyderabad

Promoters :S. Sivakumar and Associates