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VisualSoft may touch Rs 1,000, say analysts

NetScribes/Rajiv Banerjee

A 174 per cent rise in net profit for the quarter ended December 31, 2000 has made analysts bullish on VisualSoft Technologies. Analysts have put a target price of Rs 1,000 for the VisualSoft scrip in the next three months, an upside of 20 per cent from its current levels.

The scrip, which hit the 8 per cent upper circuit limit at the Bombay Stock Exchange on Tuesday, is trading at Rs 850 on Wednesday noon.

"The company will grow at an estimated compounded annual growth rate (CAGR) of 80-90 per cent for the next three years. So, going by the current results, we see an upside to Rs 1,000 levels in the medium term," said Nayan Mehta, analyst at Emkay Shares and Stock Brokers Pvt Ltd.

For the quarter ended December 31, 2000, VisualSoft's topline increased by 125 per cent to Rs 405.1 million from Rs 179.6 million in the year-ago period. Profit rose 174 per cent to Rs 206.4 million from Rs 75.2 million in the previous corresponding quarter. Operating margins for the quarter were up at 56 per cent from 46 per cent in the same quarter last year.

"The results are better than expected. The markets were expecting a bottomline growth of 140-150 per cent," said Milind Muchchala, analyst at Dalal & Broacha Stock Broking Pvt Ltd.

VisualSoft is currently trading at a P/E multiple of 23 times its EPS of Rs 35 for fiscal 2000-01. Tejas Doshi, senior analyst at Sushil Finance Consultants Ltd, estimates the EPS for fiscal 2001-02 to be around Rs 70 with a P/E of 15. "We are looking at a price target of Rs 1,100 in one year," said Doshi.

On Tuesday, the stock closed at Rs 830 on the BSE, up 7.72 per cent from its previous close of Rs 770.55. A total of 74,330 shares were traded at the counter.

Analysts say that VisualSoft's four R&D tie-ups, including one each with P&G and Panasonic, augur well for the company. The company has struck a balance between products and services in order to derisk its business model, they add.

"Out of its total sales of Rs 405 million, Rs 209 million has been accrued from sale of products and the balance from services. Thus, the company is not relying on just one avenue for its business," said Mehta.

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