Sunday, August 14, 2011

Polaris Software - Buy

JRG Securities is bullish on Polaris Software Lab and has recommended buy rating on the stock with a target of Rs 228 in its August 4, 2011 research report.

�Polaris registered strong revenue performance during the June quarter as Operating Income jumped up by 25% YoY and 3% QoQ to Rs 450 Crore (Q1, 12). In Dollar Terms, the Revenue growth was further better at 28% increase YoY to $101 Mln (Q1, 12) from $79 Mln last year. Under this, Software Development Services division contributed almost 99% of the OI and increased by 26% YoY and 3% QoQ to Rs 447 Crore (Q1, 12).�

�The Overseas business in the Software Dev division rose by 26% YoY to Rs 403 Crore (Q1, 12) while growth on the Domestic front too remain healthy at 28% to Rs 44 Crore (Q1, 12). With respect to the geographical balance, America contributed 47%, Europe 25%, IMEA 12% and Asia Pacific contributed 17%. The management has also enhanced its revenue guidance for FY 12 to $430-440 Mln as against $425-435 Mln earlier led by increase in size and number of deals.�

�Polaris is persistently enhancing its product basket (specifically through IntellectTM) in almost all forms of banking and financial operations and has gained acceptance amongst leading financial institutions across the globe. At the Trailing market price of Rs 172, the stock is trading at 8.3X and 7.3X its FY 12E and FY 13E earnings which offers good upside potential in the Medium to Long-term. Moreover, the company is almost debt-free and carries a Cash chest of over Rs 400 Crore (Jun quarter) aiding further support to our valuations. We maintain our Rating and the target price of Rs 228 on the stock,� says JRG Securities research report.

Our Recommendation :

The scrip has corrected quite sharply post melt down in both CNX IT index as well as BSE IT index.

Time Span Price Change %Change
Today 129.05 -10.90 -7.78
Week 163.10 -23.15 -14.19
Month 174.85 -34.90 -19.95
Three Months 201.85 -61.90 -30.66
Six Months 184.80 -44.85 -24.26
One Year 175.05 -35.10 -20.05

Buy if the scrip falls to Rs.100 levels and hold for a target price of Rs.180 holding period is 9-12 Months.

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