X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Polaris: Recasting itself - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jun 6, 2001

    Polaris: Recasting itself

    Polaris clocked a topline growth of 81% for FY01 and is looking to grow to a size of Rs 10 bn by FY04. For FY01 the company had grossed revenues of Rs 2.6 bn. Therefore, the CAGR (compounded annual growth rate) required for the company to meet its objective is 56%. Looks quite achievable considering the fact that Polaris, traditionally, has grown at rates far higher than this. The lowest growth rate the company has clocked was for FY01. Also, the company derives almost 70% percent of its revenues from what it calls the BFSI (banking, financial services and insurance) segment. According to the company the market size of the BFSI segment is expected to grow at a CAGR of 23% to be of the size of US$ 209 bn by FY08.

    To meet the challenges of rapid growth the company is undergoing what is describes to be a “sea change” in organizational structure. Earlier the company was organised into eight SBUs (strategic business units) that included retail banking, investment banking, networking and telecom, insurance and ERP (enterprise resource planning) tools. The company has done away with the SBUs. The entity has now been re-structured into the following units — strategic relationship and delivery units (SRDU), strategic practice units (SPU) and global sales organisations (GSO).

    According the company in the last four years, the SBUs of Polaris have grown like independent companies and the knowledge sharing between them was found to be difficult. Therefore, to create synergy amongst the business units the company has proposed a change in organizational structure. The company believes that the new organizational structure will facilitate speedy delivery, domain & technology competence and a strong sales force.

    SRDUs will be a single point of control responsible for the project delivery to the customer i.e. the main job of the SRUs will be implementation. For successful implementation the SRDUs need to have a good understanding of the customers business. The SRDUs will be responsible for building relationships and customer mining. The company is hopeful that the SRDUs understanding of the customer’s business will not only guarantee a better delivery mechanism but will also help Polaris pitch for future contracts by forecasting the customer’s needs. In terms of repeat business, Polaris is way behind others in the software industry like Infosys that have repeat business greater than 80%. The current contribution of repeat business is 30% of the revenues.

      Revenues (Rs m) Growth OPM Revenues per
    employee (Rs m)
    P/E
    Infosys 19,006 115.4% 40.2% 1.9 39.9
    Polaris 2,656 81.7% 24.6% 1.1 19.1
    Mphasis BFL 1,729 43.2% 19.3% 1.7 15.4

    Polaris has made a very smart move by creating SRDUs. Increasingly software is becoming more and more complex but at the same time it has become more and more mission critical. Therefore, enterprises in the future will look for software companies that understand their business and can deliver solutions that go beyond mere process automation.

    The SPUs will focus on competencies in horizontal (technologies) and vertical (domains) practice areas and disseminate the same to SRDUs. Today the company has 22 SPUs, of which 12 are focusing on vertical areas. The GSO will help the SRDUs and SPUs to access the markets. The company has created three GSOs for BFSI, EIS & Emerging Vertical and Banking products and retail.

    Polaris has adapted a sensible usp (unique selling point). The usp is “faster time to market”. A lot of clients would love to hear this as not only would it be quicker solutions but also mean lesser costs, though not necessarily. The company plans to use pre-fabricated solutions from the components warehouse (CWH). This will be the key to offering accelerated time-to-market to the clients.

    But there are a few concerns. The company major revenues driver is the BFSI vertical in which almost all the software companies have a presence. A few companies that are strongly focused on the segment include Infosys and Mphasis-BFL. Therefore, competition is going to be fierce. Again Polaris is not such a strong brand name as other in the software sector. With market conditions toughening and the uncertainty regarding the US economy stretching on it will be quite a task to get new business. Therefore, it will be a daunting challenge to grow at a pace greater than the industry average (expected to be between 40 to 45% according to Nasscom). Also, the company has a high client concentration about 29% of its revenues come from Citigroup. However, the business is spread across 11 different entities of Citigroup.

    Polaris has made the right moves by restructuring itself and adopting a new strategy to differentiate itself from others. But the point of inflection will be its ability to compete against the best in the industry.

     

     

    Equitymaster requests your view! Post a comment on "Polaris: Recasting itself". Click here!

      
     

    More Views on News

    Tech Mahindra: Our Revised View (Quarterly Results Update - Detailed)

    Aug 2, 2017

    A better than expected turnaround in performance results in a change in view.

    Wipro: A Decent Start to the Year (Quarterly Results Update - Detailed)

    Jul 27, 2017

    Digital services drive growth for Wipro in 1QFY18.

    Infosys: A Decent Start to FY18 (Quarterly Results Update - Detailed)

    Jul 14, 2017

    Infosys starts FY18 on an encouraging note with a stable performance.

    TCS: Currency Volatility Plays Spoilsport (Quarterly Results Update - Detailed)

    Jul 14, 2017

    TCS starts FY18 decently despite an adverse currency impact.

    HCL Tech: Ends FY17 on Expected Lines (Quarterly Results Update - Detailed)

    Jun 29, 2017

    Volvo partnership caps a good year for HCL Technologies.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    POLARIS CONSULTING SHARE PRICE


    Aug 21, 2017 (Close)

    TRACK POLARIS CONSULTING

    • Track your investment in POLARIS CONSULTING with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MORE ON POLARIS CONSULTING

    POLARIS CONSULTING - INFOSYS LTD COMPARISON

    Compare Company With Charts

    COMPARE POLARIS CONSULTING WITH

    MARKET STATS