Polaris Software Lab

Founded in 1993, Polaris Software Lab (PSL) is a financial technologies company. It has a complete suite of financial software sold under the brand name of IntellectTM. 39 per cent of its revenues are from clients in the U.S., 30 per cent from Europe and rest 31 per cent from Asia Pacific.

 

PSL's standalone profit for Q2FY2010 is Rs 27.59 crore (up by 20% QoQ), while its consolidated profits stood at Rs 35.20 crore (up 10.58% QoQ). PSL is cash rich (Rs 446 crore as of Q2FY10) and, having fared better in the recession, it is starting to flex its muscle in the BSFI space. It recently bought Laser Soft Infosystem, a banking software product company in an Rs 52-crore all-cash deal.

 

Institutional interest in PSL has risen from 26.34 per cent in March, 2009 to 34.39 per cent at the end of September, 2009, at a time when Citi Group has consistently been off-loading its shares. Till December 1, 2009 Citi's shareholding in PSL was down to 33.57 per cent from a high of 43.33 per cent at the end of June, 2009. Mutual funds investments in the stock has gone up four-fold, from 5-to-21 (October, 2009) over the past 6 months.

 

The stock price has also appreciated quite a bit from its trading level of Rs 37, which was even below the cash it had on its books. It is now trading in a range of Rs 160. The total upside for the stock in the rally was 339.32 per cent, after tanking 71.58 per cent in the market crash of 2008. The stock is trading at a 14.25 times its earnings, but this is still below its 3-year median P/E of 15.16.