Shine Computech: Below average

Score: Below average

Suresh Krishnamurthy

SHINE Computech's initial public offer at Rs. 15 per share does not appear to hold the potential to generate returns commensurate with the risks involved in the business.

The offer price of Rs. 15, which discounts the earnings per share for the year-ended 1999-2000 at 60 times, appears unjustified, considering the present scale of operations of the company.

Shine Computech is engaged in software development and consultancy of computer software. The company recorded a turnover of Rs. 2.25 crores and a profit of Rs. 0.07 crore for the year-ended March 2000. It is operating at the fairly low-end of software development even in the domestic software sector. The competition here is intense and the risks associated with scaling up of operations are quite considerable. In this backdrop, quite apart from a higher offer price, the risks involved in an investment in this offer appears unsuitable for a retail investor.