Siris Soft: Below Average

Score: Below Average

BL Research Bureau

GIVEN the intense competition levels emerging in the B2B marketspace in the US, the relatively low scale of operations and the optimistic financial projections, the initial public offering by Siris Soft is unlikely to offer much scope for capital appreciation.

Siris Soft is making a public offer to part-finance the cost of expansion of infrastructure, meet the cost of marketing ERP products and establish branches in the US. The project cost is estimated to be Rs 11 crore and the post-issue equity is expected to be Rs 10.25 crore.

The company has two development centres in the area of e-commerce, one in New Jersey, US, and the other at Hyderabad, through which it offers a combination of offshore, offsite and onsite solutions. It has also developed WISE -- an ERP for the process industry support business and process re-engineering. Siris has also entered into strategic alliances with Allegheny Digital Corp, Organic Online Inc, Transaction Information Systems Inc, CMC and Business Software Solutions Inc.

Siris Soft's revenues grew sharply from Rs 0.47 crore in 1998-99 to Rs 3.01 crore in 1999-2000 and the post-tax earnings from Rs 0.06 crore to Rs 0.60 crore. As Siris' ability to handle large projects remains untested and the competition levels are expected to be fairly intense, the profitability projections made in the offer document appear on the high side. The company has projected a gross income of Rs 15.49 crore and Rs 19.36 crore for 2000-01 and 2001-02. Over the same period, the projected post-tax earnings were Rs 2.49 crore and Rs 3.46 crore respectively. This IPO at an offer price of Rs 10 may be given the go-by. The offer opens on September 25 and closes on October 3. The lead manager is CIL Securities and the stock is to be listed at Hyderabad and Mumbai.