For the first nine months of the current year
turnover is up 19% and profits after tax are up 35%. For the full year the
company is estimated to deliver a turnover of Rs.1600 Cr.and an EPS of Rs.20/-,
pretty much in line with the guidance
gives by the management at the start of the financial year.
Over a five year period (Mar06- Mar 11) the
company has roughly doubled its turnover from Rs.825 cr. in March 06 to an
estimated Rs.1600 cr. in March 11 and a ten fold growth in its profits after
tax from Rs.21 cr. for the year ended March 06 top an estimated Rs.200 cr. in March
At current market price of Rs.178 the
estimated earnings for ye March 2011 are discounted about 9 times.
Sheet: As on 31st
march 2010 the company had an equity capital base of Rs.49.58 cr. (9.9 crore
shares of Rs.5 paid up). Loans stood at a miniscule Rs.5 cr. and book value per
share was Rs.103.
Cash and cash equivalents were at Rs.500 crore
(Rs.50 per share) and debtors at Rs.202 crore represented approx. 2 months
sales indicating steady sales realizations.
The cash reserves of Rs.500 cr. provides the
company a considerable headroom for inorganic growth. Dividend for 2009-10 was
70% or Rs.3.5 per share giving a yield of 2% on the CMP of Rs.175.
Rationale: Polaris is a dominant financial technology player
in the region, ranked 4th amongst Indian I.T Companies providing services
to the financial sector. Its ability to build, manage and provide end to end solutions
to the banking and insurance sector through a combination of I.T products
together with the services model has held it in a good stead. Key growth driver
in the recent quarters has been the client winnings for the “Intellect” suite
of products for the financial sector. “Intellect” fetched 19 new clients in the
Dec 10 quarter and provided the company with strong tailwinds.
During last year the company spent heavily on
brand building with a campaign of 1000 spots per week at New York, the financial capital of the
At 9 times current year earning, a reasonable
sales/ market cap ratio of 1:1 times. 2% dividend yield, negligible debt and a cash + cash equivalents of Rs.50 per share
makes Polaris a very safe bet in the I.T sector at CMP of Rs.175. A strong
recovery in the U.S financial sector gives an additional confidence to invest
Although the company has not given any kind
of formal guidance for its earning for 2012 Mr. Arun Jain CEO of the company in
an recent interview with a leading
financial TV Channel said he was
confident of achieving a 30 % net profit growth for next year.