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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (3636)	2/3/1999 7:43:00 AM
From: Mohan Marette	Respond to of 12475

IPO-Smalll Cap Cyber paper-Cybermate Infotek. One could consider investing in this maiden issue as the sentiment is bullish for the software sector, says Sameer Chavan Cybermate Infotek Issue size: Rs 29 million Price: Rs 10 at par Opens on: February 5, 1999 Lead managers: Canara Bank Listing at: Hyderabad and Bangalore After a long lull in the primary markets and the success of the Sonata Software public issue in December, a public issue finally emerges. And considering the state of the primary market, it is not surprising that a company from the software industry has decided to tread where others feel intimidated. The boom in the software industry is certainly the adrenaline that has got Cybermate Infotek (Cybermate) to come out with its maiden public issue. The Hyderabad-based company is offering 29 lakh (2.9 million) equity shares of Rs 10 each at par aggregating Rs 2.90 crore (Rs 29 million). The funds are being raised to part finance the expansion of its 100 per cent export oriented unit and help finance its overseas office which it is setting up in the United States. The total project cost is estimated at Rs 7.44 crore. The promoters will be contributing Rs 3.54 crore, Rs 1 crore will be raised through a loan while the rest is being funded by the public issue. Before going into the details of its operations and past performance, it should be noted that this company too has been affected by the name change bug that has raised quite an issue in the software sector recently. Cybermate was incorporated as Cybermate Corporate Services in 1994 and changed its name to the current one in 1996. Foresight or chance, difficult to say. But the prospectus states that the company began operations in a modest way during 1994-95 and then moved into on-site overseas projects and training. Now to the services that Cybermate plans to get into. The company will provide orgainsations total software solutions from the stage of system formation to its implementation leading to high-end solutions. It will also develop and market product/packages in various areas. It is negotiating for the marketing of a banking product developed by a leading bank. Another area that the company will be looking at is sub-contracting in offshore development work. For this, the company has teamed up with Universal Personalizing Technologies, USA and Phase Four Technology Management Corporation, Canada. The US operations will be handled through the subsidiary which it has set up there. The other area of focus will be networking, intranet and virtual private networks. The company also proposes to offer web based solutions and services in the areas of web authoring, hosting of home pages, development of internet tools, tracking operations and other related applications. Training is also what Cybermate will be looking at. It will undertake training on commercial basis and intends to offer franchises under a suitable scheme. The company has been promoted by three individuals with varied experience. The main promoter PC Pantulu has a finance background with his exposure to the software industry being limited to his association with the company. Among the other two, one has been in the industry for a decade while the other has been in the industry for seven years. Post-issue, the promoters will hold a 64 per cent stake in the company. On the financial front, the company has been operating on a small scale. In the eight months ended November 1998, it had achieved an income of Rs 2.07 crore and a net profit of Rs 0.31 crore. Currently, Cybermate has orders worth Rs 4.20 crore in hand. In 1998-99, it expects to achieve an income of Rs 3.64 crore and a net profit of Rs 0.47 crore. On the post rights equity of Rs 8.19 crore, this works out to an EPS of Rs 1.67. One could consider investment in this issue just based on the current sentiment towards the sector and that the issue is at par. There is minimal downward risk. Even if the company receives a minimum discounting of 10, it should give decent returns. Further, there is some institutional support for the issue. TAIB Bank will be picking up 5 lakh shares and Credit Suisse First Boston is picking up 2.50 lakh shares in the public issue.