Obviously emboldened under the haughty merchant banking supervision of Enam Financial Consultants, who are ruling the roost in the gullible issue-market as the hottest infotech-IPO- expert, SQL has failed to provide complete details of applications by bulk investors. Consequently, the merits of its superlative listing debut are entirely one of conjecture!

After a long wait - by recent standards - since June, investors finally managed to spot the SQL scrip on Delhi Stock Exchange's (DSE) trading screen on Monday this week. The SQL scrip logged a muhurat quote of Rs 105, or Rs 50 over its offer price, on DSE. And almostimmediately, it shot up to Rs 130 before a bout of profit-taking brought the price down to Rs 109 towards the end of the day. The volume of trading was relatively thin at 4,300 shares in 38 trades.

A day later, on August 24, the scrip opened its BSE innings at Rs 98.15. It fluctuated throughout the day before closing on a firm note at Rs 115. However, in contrast to DSE, the first day's volume on BSE was huge: 7.44 lakh shares in 749 transactions! In fact, SQL was on top of the turnover list for B2 Group ! Indeed, the large volume, as well as the high average of around 1,000 shares per trade on the opening day, makes one wonder if the infamous "grey market" - the contagious breeding ground of every scam in the past - is back to life with a bang!

The high volume on BSE seemed to rub off on DSE with the latter's SQL counter too witnessing an increased activity on the second day, when 57,900 shares changed hands in 256 trades. On August 25, when the market wilted under the bear-cartel, inspired rumoursranging from political assassination to a possible media-terrorism on the bulls, the scrip finished lower on both the exchanges in price and volume. However, on the next day, riding piggyback on a surging Sensex, SQL recovered some lost ground. Meanwhile, on Hyderabad Stock Exchange (HSE), where the scrip was also to be listed, trading commenced on Thursday at Rs 103. Towards the end of first day, the scrip climbed up to Rs 111.60 with an aggregate volume of 34400 shares in 193 trades.

It may be recalled that SQL had accessed the primary capital market in June with a mid-sized Rs 14.30 crore issue of 26 lakh shares at a premium of Rs 45 a piece. Typifying the present craze for infotech stocks, SQL's public offer for just the mandatory 25 per cent of its equity received an overwhelming response resulting in a subscription of 20.41 times. In tune with the rampant recent "malpractice" in infotech scrips, subscription from large investors -- better read as broker-investors and their associates -- constitutedover three-fourths of the cumulative subscription received from all investors.

From the small investors, as against a reservation of 13 lakh shares, SQL attracted 30,246 valid bids for 123.20 lakh shares, or, a subscription of 9.48 times. In contrast, for the balance 13 lakh shares from among large applicants, the issue received just 658 applications for as many as 407.55 lakh shares, thereby getting oversubscribed more than 30 times! The lopsided application pattern in the bulk category translated into a whopping average of about 62,000 shares per bid! Interestingly, there were at least 7 major applications at the top end for 115 lakh shares, or almost four and half times the offer size! Experience has it that invariably, such bulk applicants are the market operators and manipulators.

While the 600-odd large investors control 50 per cent of SQL's floating stock, the other half is well spread out amongst 13,000 shareholders, with a holding of just 100 shares each. As such, SQL's large shareholders wouldbe the `price-makers', while the smaller lot would be the `price-takers !

Promoted by a team of six computer professionals led by Ashok Kumar Agarwal, SQL was initially incorporated in July 1987 as IT Consulting Services Pvt Ltd. The company acquired its present name in 1996. SQL's principal business segment comprises of synergic areas of software services and education/training. SQL derives approximately 60 per cent of its revenue from software services while the education segment accounts for the balance.In software services, the company performs onsite consulting as well as offshore development, besides enterprise resource planning (ERP) consulting. In its education division, while the company had 6 centres in 4 cities prior to its public foray, the issue proceeds were to enable the company to, inter alia, expand its presence to Singapore and 5 more cities in India. These centres are expected to cater to the high end of the technology education/training stream.

Over the years, though the company'sfinancial performance cannot be termed outstanding, it has been acceptable. From a profitability of Rs 0.45 crore on a turnover of Rs 10.19 crore for the year ended September 1996, SQL graduated to reach a bottomline of Rs 2.56 crore on a revenue base of Rs 19.03 crore for the nine-month period ended December 1998. Much of the growth has come only in the last two accounting periods, as the company had to contend with a temporary setback in activities due to a fire in 1996 at its Gurgaon facility.

SQL's profit for the 9-month period ended December 1998 translated into a fully-diluted annualised EPS of Rs 4.60 on its pre-issue equity of Rs 7.45 crore, which discounted the issue price of Rs 55 about 12 times.

For calendar 1999, SQL has projected a net profit of Rs 6.14 crore on a turnover of Rs 37.07 crore. Based on its historical trend, while the top line could be achieved, the projected bottomline appears to be a difficult task.

While SQL's financial track record may not set Dalal Street on fire justyet, the presence of a fair number of infotech professionals from premier engineering institutes amongst SQL's board of directors and its key personnel does increase one's level of comfort in the company.

Meanwhile, though the operators apparently dictate SQL's priceline on the bourses at present, it is the institutions that can decide its immediate destiny. ICICI and UTI together hold one third of SQL s paid-up capital through their software/venture capital funds at an abysmal average cost of Rs 13.85 and Rs 7.70 respectively (as against the public offer of Rs 55 a piece). If they decide to play spoilsport and book their profits, every one is vulnerable.

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