Wednesday, September 12, 2012

Polaris FT Bought by Sundaram BNP Paribas

Arun Jain, Chairman & CEO,
Polaris Financial Technology Ltd.

By Ram NN, Assistant Editor:
Wednesday, 12th September 2012, 09:45 PM IST:

Polaris Financial Technology Ltd (BSE: 532254, NSE: POLARIS) counter in NSE, on Wednesday, witnessed a significant buy of 5.20 lakh shares by the MF, Sundaram BNP Paribas Mutual Fund.

The deal was disclosed at National Stock Exchange after trading hours on Wednesday.

The buy was specifically by the MF scheme, Sundaram Growth Fund, which pumped in Rs. 7.41 crore at Rs. 142.49 a share, to pick up a 0.52% stake in the 12th largest Indian software company by revenue.

There were no large identifiable sellers in Polaris counter on Wednesday, selling above 0.50% stake.

As per the latest Share Holding Pattern (SHP) available, which is for June end, Sundaram BNP Paribas was not a large investor in Polaris Financial Technology (formerly known as Polaris Software Lab Ltd), holding more than 1% stake.

However, the size of Wednesday’s buy is just above the size that warrants a mandatory disclosure (0.50%), and hints at a fair chance of smaller previous buys by the MF at lower levels, since June.

Other large non-promoter investors in the Polaris counter are Orbitech, Franklin Mutual Funds Series Mutual Beacon Fund, Citibank A/C Orbitech, ING Vysya Life Insurance Company, Tata Mutual Fund, Polaris Associate Stock Option Plan Trust, Orbitech Employees Welfare Trust, LSV Emerging Markets Equity Fund LP, Birla Sun Life Midcap Fund, and DSP Blackrock Small & Mid Cap Fund.

Among them, the largest holder Orbitech’s holding is by way of a merger Polaris had with a Citibank software subsidiary, many years back.

Total institutional holding is 31.55%, dominated by Foreign Institutional Investors. However, FII participation had significantly come down in the June quarter, down from 24.21% to 19.70%. Participation by Domestic Institutional Investors (DIIs) showed a slight up-tick in the same period, from 11.24% to 11.85%.

Promoter Holding in Polaris Financial Technology is at an acceptable level of 29.14%, though not robust by Indian standards in the mid-cap space.

Driven by the FII sells seen in Q1, Polaris FT stock had slumped from a 52-Week High of Rs. 175.40 in March to a 52-Week Low of Rs. 102.80 in May.

Sundaram BNP Paribas MF’s identified buy on Wednesday has come after the stock has made a strong rebound of over 38%, along with the general market and IT stocks.

The rebound in Polaris has been especially steep during the last three sessions, which may invite profit booking in the immediate period.

On the fundamental side, Polaris, which was growing at high speed in its earlier decades, has significantly slowed down, and could only double its consolidated topline during the last four fiscals. Net profit growth fared better, going up by three times during the same period.

Polaris is more focused on the global Banking, Financial Services, & Insurance (BFSI) space, and is a service provider of several topmost rung international players in this segment.

Growing beyond the roles of being IT consultant and outsourcer, Polaris, in recent years has proven to be a successful software products company in the BFSI space, with well-received products like its Intellect, which is an Enterprise Banking Solution.

Polaris FT’s group companies or subsidiaries include Intellect SEEC, PESL, GOTX Systems, Adrenalin, Optimus etc through which it has diversified into non-BFSI sectors like retail, manufacturing, travel, telecom, media, logistics, support services, brokerage platforms etc.

Consolidated Return on Equity (RoE) of Polaris FT was a healthy 19.59%, though smaller than some of its larger peers in the sector.

On Wednesday, Polaris Financial Technology closed trade in NSE at Rs. 143.50 up by 4.10%, whereas Nifty closed up by 0.76%.