But fascinated by the good performance of the infotech industry, many investors are turning their attention to lesser-known infotech counters. One such counter is M/s Cybertech Systems & Software Ltd.

Many investors are not even going through the history and the present activities of infotech companies. They are blindly trusting their money with infotech companies, hoping to ride on the bullish wave.

But this is not the correct approach. Information should be gathered about the company and only after a thorough analysis is made should an investment decision be taken. Of course, even after a thorough analysis, mistakes can still be made. But that does not mean that analysis should be discarded. Similarly, a dart board strategy can sometimes pay rich dividends, but many times this approach can ditch investors.

M/s Cybertech Systems was established in 1995. It provides on-site services in the software development of international and domestic markets. The company was promoted by M/s Cybertech International Corporation Inc, USA.

In June 1996, the company tapped the market with a public issue to part- finance a project. The company bags many software contracts and consulting assignments in the US because of its association with Cybertech International and Intellisoft CPI. This has aroused investors' interest in the scrip, because the US is the world's biggest software market.

The company is engaged in setting up a new software centre in Thane in Maharashtra. The project is slated to be the single-largest integrated software-development facility available near Mumbai city. Three activities have been planned in the project. First, it will address the large requirements of clients for offshore projects in Y2K conversion. Second, it will do other software projects. Third, it will take care of internal training.

The company's main activity is SAP training. It is focusing on offshore software development, particularly to US clients. More than 100 consultants have been trained by the company in SAP projects and placed with its parent company Cybertech International.

The Thane centre will house 800 software professionals and the investment cost involved is around Rs 20 crore. Internal accruals amounting to Rs 8 crore and term loans worth Rs 12 crore will take care of the project's finances. The company posted a net profit of Rs 5.18 crore of a sales turnover of Rs 7.46 crore in 1996-97. The equity stands at Rs 5.05 crore. The net-profit margin is impressive at 69 per cent. Cybertech Systems offered its shares at par in 1996 to investors raising Rs 5.5 crore.

Today, the shares are traded on the bourses at Rs 234. Those who invested in the scrip during the public issue would have reaped a bonanza even in this depressed market. The parent holds 51 per cent stake in the company.

Cybertech Systems considers application re-engineering and networking as its thrust areas. The firms' offshore projects include software maintenance- support system for Unisys Inc. The company also plans to set up a software centre in Hyderabad and a R&D centre at Thane.

In 1997-98, the company performed even better. Its sales turnover increased from Rs 7.39 crore to Rs 12.08 crore (projection-Rs 6.99 crore). The net profit rose from Rs 5.18 crore to Rs 7.45 crore (projection-Rs 2.93 crore). In the last three years, the sales turnover recorded a CAGR of 203 per cent and net profit of 343 per cent.

The company bagged contracts from many Fortune 500 companies in the US to provide SAP R/3 implementation services, mainly because at its Thane unit, the company has set up a facility to train software professionals in modules of SAP R/3. The company bagged many contracts from Fortune 500 companies, because of its association with Andersen Consulting and Deloitte & Touche. These two are one of the top ten consulting firms in the world.

In 1998-99 also the growth continues. The company's net income rose by 31 per cent in the first quarter ended June 30, 1998, over the corresponding period of the previous year from Rs 2.34 crore to Rs 3.07 crore. The net profit rose by 53 per cent from Rs 1.36 crore to Rs 2.08 crore. In the first quarter of the current year, the company has allotted 52.56 lakh shares to its US parent company at a premium of Rs 100 per share. Thus the company was able to obtain additional funds worth Rs 57.82 crore.

These funds will be utilised for setting up a new software centre in Hyderabad and R&D centre in Thane. The Inc Magazine of the US has ranked Cybertech International 31st among the fastest-growing companies in the US.

Cybertech International holding 51 per cent stake in Cybertech Systems augurs well for the Indian outfit. There is a bright chance for the company to become another Infosys or Satyam Computer or NIIT. There is reason to believe that those who contemplate investing in the company's scrip at present will be richly rewarded in the future.

At the same time, it should also be noted that the software development centre the company promised at the time of its public issue has never come about. The buoyancy in its revenues was contributed by its advanced learning centres.

This buoyancy in revenue coupled with a bull run on the software scrips enabled the share price to reach the dizzy heights of Rs 425. Net profit margin dropped from 69% in 1996-97 to 61% in 1997-98. The company fully depends on its survival on its parent company's absorbing the SAP-trained software engineers.

As long as this support continues, the company will perform well. But once this stops, the Indian company will be burdened with paying salary to these engineers till they receive a placement. There may also a decline in its recruits hampering its income.

Cybertech International USA has expanded its training platforms from SAP to Cisco's networking systems, Microsoft networking and also Oracle. If the American company decides to move away from SAP in future, it will affect the Indian company a great deal.

The American company's decision to buy stake in the Indian company at a price of Rs 110 per share against the market price of around Rs 250 also raised doubt. If the American company is confidant that the share price will appreciate to dizzy heights, it could have invested in the shares at market value which would have sent positive signals to the market.