Polaris pole vaults

Polaris Software was cause for cheer on Wednesday and much of that was due to its inclusion in the final list of scrips added in the derivatives segment.

The scrip of the IT company specialising in the banking and finance space snatched solid gains of 12.5% to Rs 143.70 on BSE in just an hour of trading. Polaris Software Lab, in fact, was trading near the day's high of Rs 144.80 at that point. Around 1.58 million PSL shares were traded on the counter on BSE.

The scrip had displayed its vibrance yesterday itself, when it finished 3.4% higher at Rs 127.75 after falling as much as 7.8% to Rs 113.80 earlier in the day. The scrip has been none-too-spectacular of late dropping 23.9% from Rs 162.40 on 15 January 2003 to Rs 123.45 on Monday.

The spurt on the counter follows reports that the scrip has found place in the expanded list of derivatives trading on NSE. The new additions will begin derivatives trading from 31 January 2003. The stock was also boosted by Q3 results, unveiled after trading hours Tuesday. Analysts have deemed them as encouraging.

Polaris Software's revenues for the quarter ended 31 December 2002 stood at Rs 81.26 crore in comparison to the previous quarter's revenues of Rs 75.89 crore, a growth of 7%. Profit after tax stood at Rs 6.12 crore (Rs 11.40 crore on a like-to-like basis before extraordinary items in the corresponding previous year) compared to the previous quarter's profits of Rs 9.27 crore.

Revenues of OrbiTech Solutions for the quarter ended 31 December 2002 stood at Rs 77.65 crore. Profit after tax for the same period stood at Rs 16.74 crore.

Polaris' operating profit stood at Rs 17.17 crore (excluding a provision for doubtful debts of Rs. 5.28 crore) in comparison to Rs 14.90 crore during the previous quarter this year, representing a growth of 15.2%. In dollar terms, Polaris revenues have grown around 8% over the previous quarter. Revenues have grown over 5% sequentially during the last three consecutive quarters.

Six new clients were added this quarter, taking the total active client base of Polaris and OrbiTech to 129. Polaris's utilisation rate stood at 72% in Q3 which was up from 69.3% last quarter. The combined entity's utilisation stands at 74.1%.

The board of Polaris has recommended a ‘conservative outlook' on the dispute on Bank Artha Graha contract by initiating a provision in this quarter, PSL has said in a release. The arbitration proceedings have commenced in Singapore with the Singapore International Arbitration Centre on the commercial dispute between Bank Artha Graha & Polaris Software Lab.

PSL, which began by writing code for Citigroup's Indian operations, still counts the latter as one of its largest customers. It expects to derive more than 80% of its revenue from the banking and financial services sector after the merger of Orbitech .

Meanwhile, there were reports a few weeks ago that Citigroup, which has become one of the key shareholders of PSL following the merger of Orbitech, plans to cut down its holding in the merged entity from the present 47.36%.

As per reports, PSL is mulling expansion plans, which includes the setting up of a development centre in Hyderabad in the next three months. The proposal will be placed before the company's board soon for approval. The funding for the proposed Hyderabad centre will be met internally.

PSL has three development centres as of now in India, at Chennai, Gurgaon and Noida. On the international front, PSL is also planning to enter Luxemborg, the Netherlands and Belgium. It is also keen on entering China by setting up a development centre to cater to the Japanese market.