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: Second rung performance - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 18, 2001

    Polaris: Second rung performance

    Polaris has posted a 0.7% sequential rise in revenues and a marginal dip of 0.9% in bottomline for 2QFY02. On a YoY basis, the company’s topline has grown by 12% and the bottomline has risen by 10%. There is a significant other income component, which fueled the net profit figure for the quarter. Excluding this, the company would have reported a 3% dip in net profits on a YoY basis.

    However, on the positive side, the company has managed to improve operating margins by 80 basis points. This is due to the fact that Polaris has managed to control is employee costs which have shown a decline of 10% sequentially. This is inspite of net addition of 93 employees compared to 1QFY02.

    (Rs m) 1QFY02 2QFY02 Change
    Sales 701 705 0.7%
    Other Income 13 19 47.8%
    Expenditure 539 538 -0.4%
    Operating Profit (EBDIT) 161 168 4.1%
    Operating Profit Margin (%) 23.0% 23.8%
    Interest - -  
    Depreciation 22 25 17.9%
    Profit before Tax 153 162 5.8%
    Extra-ordinary item 6 -
    Tax 4 7 111.4%
    Profit after Tax/(Loss) 156 154 -0.9%
    Net profit margin (%) 22.2% 21.9%  
    Diluted number of shares 51.2 51.2  
    Diluted Earnings per share* 21.1 12.0  
    P/E (at current price)   5.9  
    *(annualised)      

    During the quarter, Polaris has added 7 new clients. This takes the total number of active clients to 87. The company also signed up two large banking relationships for its product BankWare. The contribution of offshore revenues increased to 59.6% of total revenues from 58.2% in 1QFY02.The remaining came from onsite revenues. The increased contribution of offshore revenues could be another reason due to which the operating margins have moved up.

    The business areas that saw growth included product enhancement and migration & re-engineering. However, all other areas showed de-growth. Other companies have been ramping up business from the maintenance area. The fact that Polaris failed to do so is a cause for concern. As regards the growth in income from product enhancements, the revenues might have a high degree of variability.

    For FY02, the company has given guidance in the range of Rs 3 to 3.2 bn for the topline. Considering the fact that the company has earned Rs 1.4 bn already in 1HFY02, it will need to earn in the range of Rs 1.6 bn to Rs 1.8 bn. To meet this target the company will have to achieve a minimum sequential growth of 13% in the next two quarters. This seems very unlikely considering the fact third and the fourth quarters are expected to be tougher for the software industry compared to the first half. Also, the vertical that was hardest hit by the September 11th attacks was the BFSI (banking, financial services and insurance) vertical. Polaris earned 68% of its revenues from this vertical.

    However, the US contributed only 40% to its revenues, which is one of the lowest in the software industry. Polaris has managed to de-risk its geographic concentration significantly over a period of one year. In 2QFY01 the company earned 71% of its revenues from the US. Europe contributed 22% and the contribution of India was 16%. The Asia pacific regions contributed the rest.

    The company’s client concentration figures are slightly higher than the industry averages. While the contribution to revenues from the top client is 15%, the top five clients accounted for 42%. The figure for Wipro is 30% and that for Infosys is 25% (for top 5 clients).

    At the current market price of Rs 71, the stock is trading at a P/E multiple of 6 times its 2QFY02 annualised earnings. The stock price might see a down side due to the lackluster performance, considering the fact that the stock price had run up on hopes of a solid performance by the company.

     

     

    Equitymaster requests your view! Post a comment on "Polaris: Second rung performance". 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

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    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.

    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.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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 18, 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 - VAKRANGEE LTD. COMPARISON

    Compare Company With Charts

    COMPARE POLARIS CONSULTING WITH

    MARKET STATS