Buy Polaris, target of 228: Reliance Money

By SiliconIndia   |   Friday, August 28, 2009
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Bangalore: By looking at its overall performance last quarter, Reliance Money has recommended a buy rating on Polaris Software Lab with a target price of Rs. 228. The company has recorded a 15 percent Compound Annual Growth Rate (CAGR) in both the topline and bottomline. The brokerage expects the earnings per share (EPS) CAGR of Polaris shares to be 31 percent over financial year 2009-11 (FY09-11). Reliance Money believes that Polaris is a strong candidate for bonus issue with a book value close to Rs. 90, on the other hand unlocking of real-estate value will bring added value to the investors. Polaris had reported a rise of 18 percent in its consolidated profit after tax for the quarter ended June 30, 2009 to Rs. 31.83 crore over the same period last fiscal. The company had a consolidated profit after tax of Rs. 27.01 crore during the June quarter in 2008. The consolidated gross profit of the company rose to Rs. 117.67 crore in the latest quarter from Rs. 102.30 crore in June quarter last year. Polaris is a software and products company established in 1995 and it largely caters to the banking, financial and insurance sectors. Citibank is the largest shareholder of the company with close to 43 percent stake and incidentally Citigroup is also the single largest clients with 40 percent odd revenues contribution. With the target price of Rs. 228, if the stock is bought at Thursday's closing price of Rs. 149.20, the percentage of gain would be 52.81 percent.
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