An immediate consequence of that has been the decrease in inventory level by Rs 64.22 crore.

The OPM was around 10 per cent in hardware business.

The other business of the company was of engineering services group i.e. servicing related to telecom products.

The growth rate of that segment was insignificant at 9.82 per cent. That is why at the first sight, the growth in topline looks ordinary at 17 per cent. The real push to the sales and profit has come from low volume-high margin(35 per cent margin approximately) business of software and E-commerce. This is evident from the quantum jump recorded in the operating profit by 68 per cent to Rs 123.39 crore. This year, Rs 320 crore had come from this business compared to Rs 192 crore last year.

Removal of majority interest cost from the P&L account is expected to give a major boost to the bottomline in future. This has been possible through divestment of Global Electronic Commerce Services Ltd (GECSL) stake, which is a `goldmine' for the company.

Future valuation might be influenced by GECSL, which will be setting up payment gateway for banks.

Next year will be even better in terms of bottomline as it has already booked a profit of Rs 170 core in the first quarter due to redemption of non-convertible debentures (NCD) worth Rs 180 crore against GECSL shares at Rs 200 each held by the parent.

The chances of a further equity dilution appear remote even if the expansion is undertaken, considering the healthy cash position of over Rs 300 crore. The conversion of Fully Convertible Currency Bonds issue of Swiss francs is also almost over.

If the fourth-quarter performance is any indication for 2000-2001, it should notch up EPS of around Rs 40. Thereafter, even if conservative bottomline growth rate of 50 per cent is assumed for in the next two years, the earning per share (EPS) is expected to be around Rs 90. It means the three-year forward P/E of around 13 at the current price.

According to industry experts, the stock is likely to enjoy a P/E of at least 25 at any time, given the potential of the sector as well as the company.

While fundamentals may appear strong, the technical position of this scrip has turned extremely bearish. The fall was more than a corrective one, and in the recent panic, the stock has broken all medium term supports, and heading southward. The first support of Rs 2,063 was broken in the first week of April. Subsequently, other bottoms have also been broken, and the stock hit a low of Rs 1117.

For extremely short-term players, this point becomes a reference for exit. On the upper side, if the stock goes above Rs 1308, the short-term outlook will improve. However, for a better medium term outlook, the stock needs to form higher bottoms, and cross immediate resistance. After Rs 1,308, the next hurdle for the stock exists at Rs 1,585.

Manish Joshi and Deepak Singh Tanwar