Buy Polaris Software Lab; target Rs 180: Hem Securities

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Buy Polaris Software Lab; target Rs 180: Hem Securities

Hem Securities is bullish on Polaris Software Lab and has recommended buy rating on the stock with a target price of Rs 180 in its December 3, 2011 research report.

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Hem Securities is bullish on Polaris Software Lab and has recommended buy rating on the stock with a target price of Rs 180 in its December 3, 2011 research report.

"Polaris Software Lab was incorporated in 1993 and is now one of India's leading institutions contributing to the knowledge economy of the global financial services marketplace. The company has registered excellent numbers for the quarter ending September 2011. The company has crossed Rs.500 crore as revenues in the current quarter ended. A sharp rise of 35% in the consolidated revenue to Rs. 5231.19 million was witnessed in the quarter as compared with Rs.3879.53 million in the same quarter last year. Operating profit moved upto to Rs.755.36 million from the like quarter previous year of Rs.602.37 million. Production volume growth increased by 6.45% in the current quarter. Net profits advanced about 12% to stay at Rs.539.36 million."

"Intellect flagship brand product revenue contributed Rs.1392.8 million in the current quarter, representing 27.32% of its total revenue; witnessing a jump of 68% y-o-y. Services revenue contributed 72.68% at Rs.3704.60 million to the revenues; representing a growth of 21% on y-o-y basis. Polaris has recorded 12 intellect wins across banking and insurance verticals during the quarter. Product margin for the current quarter is at 22.12% and services margin is at 12%. Capital expenses incurred during the quarter are Rs.250 million. Revenue mix for on-site and offshore stood at 40.85% and 59.15% respectively. Quarter revenues were well distributed with Americas contributing 45.43 %, Europe 22.40 %, IMEA 15.25 % and Asia Pacific 16.92%. Utilisation for the quarter stood at 80%."

"With upward revision of revenue guidance and increasing deal sizes; Polaris is set to witness strong growth ahead. We expect it to clock an EPS of Rs.22.71 and Rs.27 in FY12 and FY13 respectively. We initiate a 'BUY' on the stock with a target price of Rs.180 expecting an appreciation of about 43% from the current level with the medium to long term investment horizon," says Hem Securities research report.

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To read the full report click on the attachment