New Delhi, January 7: Do the astonishingly high valuations of softwarestocks (often in excess of 200) leave you gasping? Then, picture this. Thenew IT listings coming up later this month will give investors returns inexcess of 150-200 per cent in just three months. This, in turn, means anannualised return in excess of 600 per cent! Yes, there is money in IT.Among the new listings in January are Shiv Nadar's HCL Technologies (whichcreated a record of sorts by mopping up over Rs 20,000 crore) and televisionsoftware major TV-18 (of CNBC fame). Brokers expect HCL Technologies to listat Rs 1500-1600 (an appreciation of 158-175 per cent), while TV-18 isestimated to notch up gains of more than 230-260 per cent at Rs 600-650.
Delhi-based STG International is likely to list at Rs 200-250 (offer priceRs 66), Zenith Infotech at Rs 200-225 (an appreciation of 80-100 per cent),Visesh Infosystems at Rs 175-200 (offer price Rs 50) and Integrated Hi-Techat Rs 50-75 (a whopping gain of over 400 per cent).
According to brokers, the ongoing correction in software stocks will nothave any major impact on these new listings. ``What we are seeing today isjust a temporary cooling off before punters take to their shopping spree yetagain,'' says a Delhi-based investment banker. Adds a DSE broker, ``Themelt-down (if you can call it that) is because of the Nasdaq crash. Worldover, IT stocks will continue to lead the markets and India is noexception.
So, it is not surprising that these listings will command such a premium.''According to a fund manager, ``Despite the high valuations in the softwaresector, it would be a mistake to stay away from this sector and invest insome of the more traditional stocks.
Everyone realises this. So, despite the fall in prices of the past few days,the undertone continues to be bullish.'' Also, with the third-quarterresults expected soon, fresh buying in these counters should gathermomentum. Plus, the new FII money - which has, but one way to go.
HCL Technologies, one of the largest IT IPOs in recent times, is likely tolist in the next 10-15 days. The Rs 4 face-value share was offered at Rs 580and is likely to attract an initial quote of Rs 1500-1600. According to afund manager, the high price for the stock is understandable considering theexcellent clientele and business prospects. TV-18, which produces televisionsoftware with a speciality in business news, is likely to list at over Rs600. For one, the valuations of TV software stocks are high. But moreimportant, is the fact that the company did not reserve any shares for MFsor FIs.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.