Stock Review: Sankhya Infotech

This is one stock for very high risk kinds of investors because these are companies where you can loose the entire capital. Investors should keep that in mind. This company may become a dark horse. There are a few interesting developments which have taken place in the company in the last few months.

In the month of April, HPL Power System bought a 10% stake in this company through market purchases at a price of close to Rs 39. One of the promoters of HPL is Kavita Prasad, who is the daughter of the main promoter of HPL Power Systems. She has joined in as a Director of Sankhya Infotech.

The promoters have also recently allotted about 15 lakh warrants to themselves at a Sebi determined price, which I believe in their case will be close to Rs 30. Against the buying price of Rs 40 HPL Power and Rs 30 at which the promoters are increasing their stake in the company, the stock is currently available at Rs 21-22 which is close to its 52-week low.

Looking at the business of Sankhya Infotech, this is a company which is into a number of domains like e-learning development. They make simulators for the defence segment. The company also caters to the aviation segment and has a number of leaders in aviation like Kingfisher, Emirates, Air France and Boeing as its customers.

As per the latest balance sheet, this company has got an order book which is close to Rs 100 crore. They got listed in 2000 and since then it has been making profits at net level. In FY07 this company made a profit of Rs 7 crore, FY08 Rs 9 crore, FY09 Rs 4.5 crore and in FY10 it made a profit of Rs 2.5 crore. The profit got impacted because of demand from the income tax authorities of about Rs 7 crore which the company appealed against won.

In future you may see the company focusing more on defence and defence related projects, since HPL has a strong position in the defence segment. Against the book value of Rs 60, the stock is available at about Rs 22 and it is available at close to its 52-week low. They have been making profits at net level since the beginning. So this is a stock for high risk investors but at the current price it may be worth the risk.