LAHORE: Looking at the future, many technology companies are planning to go for a listing on the stock market.
Last month, technology stocks outperformed other sectors in the PSX and investors received huge returns, ranging from 14 % to 33 % in a month. Analysts agreed that technology stocks are playing a vital role in the upward trajectory of the market; TRG Pakistan Limited, Systems Limited, NetSol Technologies, and First National Equities (FNE) played important roles in the rally.
Shankar Talreja, Deputy Head of Research at Topline Securities said, “information and technology was the best performing sector at PSX in 2020. This sector outperformed the broader market index significantly on the back of a global tech rally and improving fundamentals of the companies like Systems limited, whose sales and profit increased by 41% during the nine months of 2020.”
The share price of Systems Limited gained Rs 84.16/share in last 30-day period, followed by NetSol Technologies which gained 51.44 or 40% in a month, Pak Datacom Limited gained Rs 24.53 in a month. TRG Pakistan Ltd gained Rs 20.38 or 24% in a month after closing at Rs 95.80 today compared to Rs 75.42 a month back. Avanceon Limited gained Rs 10.58 (19%) after closing at Rs 93.39 compared to Rs 82.81 a month back.
FNEL, which is considering the newest entrant into the technology sector, rose by 68.4 percent to reach Rs 20.43 on Wednesday – January 13, 2021 from Rs 13.98 on December 14, 2020.
Another technology company, First National Equities Limited, which owns Kingbhai Digisol Private (Ltd), is taking over Pakistan’s digital landscape. Winstore.pk, a market place owned by FNEL, has started competing with other shopping platforms like Amazon and Daraz, has been launched recently to a very strong response. The tech company has also launched a monthly subscription product called WinCard, which is similar to Amazon Prime, to strengthen their customer base. As the card is offering phenominal benfits and returns, demand of this card is increasing day by day. Another product 7Lands, a digital platform for the real estate development and trade, has been making inroads in the digital world. FNEL, which is considering the newest entrant into the technology sector, rose by 68.4 percent to reach Rs 20.43 on Wednesday – January 13, 2020 from Rs 13.98 on December 14, 2020 (1 month ago).
Avanceon Limited (AVN) is also going for a listing of its company ‘Octopus Digital’ sometime in the next month. The company has yet to announce the date of its Initial Public Offering (IPO) for its IT solution company.
Octopus Digital – has planned to raise Rs 1.5 billion through an offer of shares to retail investors at the PSX. BMA Capital is the lead manager of this IPO. This will be the first IPO by a tech firm after a gap of five years, as Systems Limited was the last tech firm listed at the Pakistan Stock Exchange five years ago.
Ali Asghar Poonawala, research head at AKD Securities, said, “economic slowdown can inhibit IT spending in the short-run. However, medium-to-long term prospects look bright as firms grow comfortable with offshoring/outsourcing.”
According to the analyst, Systems Limited is strategically placed to capture the benefits of the “work from home” economy, having a pedigree of established collaborative ventures with top-tier foreign vendors (namely Microsoft, IBM, Oracle, Salesforce).
As the country’s top software services exporter, SYS is a prime beneficiary of currency depreciation, having exports share of 77% as of 2020.
Analysts said tech stocks and companies having subsidiary in the technology business will lead the market in the next few years.