INFOTECH ENTERPRISES: Stock Is Stronger than Current Quotes

Fact Sheet

InfoTech Enterprises
42, Nagarjuna Hills, Panjagutta
Hyderabad 500082.
Tel: 040 3354172/2464.
Fax: 040 3350841
52-week high: Rs 816
52-week low: Rs 58
Listing (Stock Exchanges): Bombay Stock Exchange, Madras Stock Exchange,
Hyderabad Stock Exchange, Ahemadabad Stock Exchange and National Stock
BSE Code: 32175

Infotech Enterprise came out with a public issue of 23.25 lakh equity shares
of Rs 10 each at a premium of Rs 10 per share, aggregating Rs 4.65 crore for an
expansion project of Rs 12.5 crore in March 1997. The expansion plans included
new facilities for handling engineering consultancy, 3D modeling, and enhancing
CAD/GIS conversion capacity from 3.88 lakh hours per annum to 6.25 lakh hours
per annum.

Today, GIS conversion services is the major focus area of the company.
InfoTech reported a turnover of Rs 33.79 crore for the year ended March 2000
with the GIS division contributing 84%. Net profit stood at Rs 10.32 crore,
posting a growth of 59% over the previous year. Out of the total equity of Rs
5.9 crore, the promoters hold 33%, Indian institutions, bodies and mutual funds
hold 34%, NRIs hold 12%, collaborators hold 3% and the public holds the balance
18% of the equity.

Investment potential

Infotech is currently traded at Rs 61 discounting its projected March 2001
EPS by two times and March 2002 EPS by only one time. The company’s market
capitalization stands at Rs 36 crore and based on its projected consolidated
revenues of Rs 95 crore in March 2001, the market capitalization/sales stands at
only 0.38. Infotech peaked at Rs 1,500 last year after the company reported its
deal with ASI to acquire ASI’s Mumbai-based subsidiary. With the sharp decline
in the share price of software companies, Infotech too bore the brunt and dipped
to below Rs 100 in the current calendar year. Despite completing the
acquisitions of Cartographic and Dataview, the company’s lower than expected
growth rate in Q1 failed to cheer the market.

has one of the largest digitization centers in India. With the successful
acquisitions of Cartographic, Dataview and Advance Graphic Software, we believe
that the company is on a strong growth path. Considering the steps taken by the
company in 2001, the projected group revenues of close to Rs 100 crore and the
fact that the share has declined substantially in the past few months, we feel
that there is a scope for improvement in the stock in the longer term. With the
recent announcement of profit warning by IT major Infosys, we feel that
sentiments for IT stocks would deteriorate further, which would put some
pressure on Infotech’s share price as well. We are however confident about the
company’s performance in the long term and feel that immediate improvement in
the share price would depend on the Q4 results due to be announced soon. Hold.

Sushanto Mitra is the founder
of Technology Capital Partners
The views reflected here are of the author and not of this publication. No
liability is accepted for losses based on the information presented here.

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