Digital GlobalSoft witnessed heavy trading on the Bombay Stock Exchange with volumes soaring 205.30 per cent to 21.62 lakh shares, while volumes on the National Stock Exchange also jumped by 241 per cent to 48.90 lakh shares. The combined volume of both the exchanges was more than 71 lakh shares.
The share price closed 3 per cent lower at Rs 551.80, after hitting an intra-day high of Rs 575, but up from its intra-day low of Rs 536.
Since the last six months, the Digital GlobalSoft stock has witnessed a massive rise of 169 per cent to Rs 569.40 on 19 March 2002 from Rs 211.75 on 21 September 2001. The stock had surged on rumours that the global merger of Compaq-Hewlett-Packard may not take place. Meanwhile, the BSE Sensex rose 37 per cent to 3,560.32 from 2,600.12 in the same period.
Today's fall in the stock was seen as a fall out of the voting of US shareholders in favour of the Hewlett-Packard-Compaq merger. Green signal for the Hewlett-Packard-Compaq merger was not taken kindly by the market for Digital GlobalSoft. The company is 51 per cent owned by Compaq, which derives 80 per cent of its s business from Compaq. There are concerns that after the merger the share of business from Compaq may drop and would now go to Hewlett-Packard 's Indian arm. Consequently, punters, who had amassed the stocks, reportedly liquidated their holdings.
However, the other side of the story was also explained by analysts. An analyst from a foreign fund house said the services of Digital GlobalSoft and Hewlett-Packard are not overlapping but to an extent complementing each other. Thus, there is no question of the business declining for Digital GlobalSoft. On the contrary, there is a possibility of a merger between Hewlett-Packard (India) and Digital GlobalSoft. This could be the reason that there was no selling on the counter from institutions.
However, analysts did not rule out a slowdown in the business of the Indian subsidiary in the short term after the merger due to the restructuring of the merged entity. Meanwhile, there are talks in the market that an European brokerage has set a target of Rs 800 per share for Digital GlobalSoft.
For the third quarter ended 31 December 2001, Digital GlobalSoft posted an impressive 48.50 per cent rise in net profit to Rs 24.62 crore compared to Rs 16.58 crore in the same period of the previous year. Net sales increased by 66 per cent to Rs 87.28 crore from Rs 52.63 crore in DQ 2000.
