Prosoft Systems: Below Average

Score: Below Average

BL Research Bureau

THE medical transcription into which Prosoft Systems proposes to diversify is a highly competitive one.

Though the near-term outlook in terms of revenues, operating profit margins and post tax earnings may seem rosy, the intense competition may drive down operating profit margins and the demanding customer requirements (in terms of deadlines and workload) may lead to a shakeout in the medium term.

Besides, the level of scaling up of revenues and earnings projected by Prosoft Systems in 2001 and 2002 may be difficult to achieve. In this backdrop, investors may ignore this initial public offering being made at an offer price of Rs. 10 by Prosoft Systems.

Prosoft Systems is making this IPO to part-finance its proposed diversification into medical transcription by establishing a master editing facility at Bangalore and two production units at Bangalore and Vadodara. In addition, it also plans to set up an office in the US. The project cost has been estimated at Rs 11.41 crore. The company is currently engaged in the business of corporate training placements, software development and software education. The promoter is new to this line of business and the lack of experience may raise the risks involved in a project of this kind. The lead manager to the offer is Fedex Securities and the IPO opens on October 18 and closes on October 23.