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Jai Kumar NR
New Delhi, Sept 20: With a 276 per cent spurt in its stock price and a software tag, VMC Software (formerly Vidhan Mercantile Company) is joining the premium race by pricing its public issue at Rs 95. Ahead of its Rs 5.55-crore public issue, VMC Software's stock had zoomed from a low of Rs 67 on March 10 to its all-time high of Rs 253 on August 24. After touching its all-time high, a correction at this counter saw the stock falling to Rs 184 on September 3 in the following eight trading sessions. However, the scrip bounced back to the current level of Rs 203.
The company, which was engaged in trading and finance, had changed its name to VMC Software on January 5, 1999. VMC's software foray coupled with the stock rally has helped the company charge a premium of as high as Rs 85. In fact, the VMC's premium is even more than Sonata Software's premium of Rs 80 for its IPO and KPIT Systems' premium of Rs 80.
Thanks to its rally on the bourses, on the face of it, VMC's public issue at Rs 95 appears attractiveas the equity shares are being offered at a hefty discount of 53 per cent the current market price of Rs 203.
Since January 1999, the company has been engaged in developing e-commerce software and educational software. The company enjoys a low equity base of Rs 74.7 lakh. Even after the public issue, the paid up capital will be low at Rs 1.75 crore. For fiscal 1999, the company reported an unprecedented growth in net profit from just Rs 2 lakh in 1997-98 to Rs 1.5 crore. The quantum jump in net profit is on a total income of only Rs 1.94 crore. On a low equity base of Rs 74 lakh, the EPS for fiscal 1999 works to Rs 28.82. And this makes the issue even more attractive as the price-earning multiple based on the offer price of Rs 95 is low at 6.25.
Promoters are currently holding 50.8 per cent of the paid up capital and the balance is held by banks (0.42 per cent), corporate bodies (24.47 per cent) and public (24.31 per cent). After the issue, the promoters' stake will come down to 35 per cent.
Promotersare pumping in Rs 2.44 crore by way of subscribing to 2.33 lakh equity shares at Rs 95. Around 1.84 lakh shares are also reserved on a firm basis for NRIs/OCBs. Besides, around 1.47 lakh shares are also reserved for mutual funds/banks. The net public offer is 4.37 lakh shares.
Lead managed by Keynote Corporate Services, the public issue opens for subscription on September 29 and closes on October 8. The new shares will be listed on Mumbai Stock Exchange.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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