The investor enthusiasm at this counter is understandable as the company has reported a 12.2 fold gallop in net profit for the first six months ended June 30, 2000. The stock started its rally from a low of Rs 366 on July 25 in anticipation of a good show from Mascon and touched a high of Rs 416.7 on July 28. As the company surprised the market by announcing almost a 12-fold spurt in turnover for the six-month period on July 31, the stock zoomed to Rs 443 on August 1.

For the six-month period ended June 30, 2000 income from operations zoomed to whopping Rs 141.06 crore (1187.8 per cent jump) against Rs 10.96 crore in the corresponding period of 1999. In fact, the six-month turnover is 2.32 times of the figure (Rs 59.13 crore) for the nine-month accounting period of December 31, 1999. For the full year, the company is expecting to record a total turnover of Rs 260 crore.

Thanks to the unprecedented growth in turnover, net profit has galloped to Rs 28.72 crore. Operating profit rose to Rs 30.68 crore from Rs 2.18 crore. For Mascon, the second quarter of calender 2000 proved to be better compared to the first quarter. Against a turnover of Rs 61.06 crore for the first quarter, the figure jumped to Rs 80 crore in the second quarter. In tandem, net profit jumped from Rs 11.8 crore (Q1) to Rs 16.85 crore (Q2).

Margins both at operating and net levels have improved. This is also a healthy sign. Net profit margin has improved from 19.7 per cent to 20.36 per cent and operating profit margin has increased from 19.89 per cent to 21.74 per cent.

There is not much difference in margins at net level and operating level which is common in software industry. Compared to other software players, the company is currently operating at a margin of 21.74 per cent which is low. This is mainly due to its consulting business which is relatively a low margin business.

The current impressive show from Mascon is mainly volume driven. However, in the long-term, it may have to take up projects where there is more scope for value addition. As the competition in the field is increasing, this will be crucial for the company to maintain growth in the bottomline.

Despite more than a five fold increase in equity, the company has been able to maintain growth in EPS thanks to the sharp jump in net profit.

On an enhanced equity of Rs 20.88 crore, the annualised EPS works out to Rs 27.5 against the annualised EPS of Rs 13.54 for fiscal 1999. However, this is lower than the nine-month period figure of Rs 28.55 (not annualised).

The stock is currently quoted at a price-earning multiple of 62 and at every correction, one will get an investment opportunity with a medium-term perspective.

Since the beginning of this calender, the company has been regularly hitting headlines for some reason or the other. In April, 2000, the company had allotted 15.2 lakh shares to promoters, associates and technology partners. In June this year, the company had issued a 3:1 bonus (1.56 crore shares). In May, the company had invested $4.25 million in a 100 per cent arm in Mauritius for software development and the subsidiary had subsequently invested $4 million in a US-based software company.

The company is also in the process of acquiring a US-based software firm for which it has already paid an advance of $2.75 million. The company is also acquiring a management consulting company in India.

Mascon Global operates in two distinct segments - IT consulting/projects business, and IT products. It has clients ranging from Citibank, Tenneco Automotive Walker Exhaust Division, Continental Traffic Services and General Electric in the overseas market and ONGC, L&T McNeil, Bharat Electronics and Wockhardt in the domestic market.