Polaris Software Stock Dips 15% To Rs 159

Chennai, October 28: | Updated: Oct 29 2002, 05:30am hrs
Shares of Chennai-based Polaris Software Labs Ltd (Polaris) continued their southward journey and the stock shed 15 per cent to close at Rs 159.10 on Monday on The Stock Exchange, Mumbai (BSE).

The fall is despite Polaris reworking the merger swap ratio with Citigroup-owned OrbiTech Solutions Ltd to its favour. Citigroup had cut the billing rates of work outsourced to OrbiTech by 16 per cent to 24 per cent, which led to the deal being renegotiated.

The second quarter results were below market expectations and the guidance that the margins would be under pressure during the second half contributed to the fall.

The successful completion of the merger and the favourable stock ratio has been ignored by the bearish market, said an analyst with a domestic brokerage house.

Polaris had reported that its net profit fell 40 per cent to Rs 9.27 crore for the second quarter.

The stock had already fallen by 10 per cent on Friday to Rs 186 as the market anticipated a lacklustre second quarter performance and investors reacted to persistent rumours that the merger with OrbiTech would be called off. The stock has lost Rs 46 or 23 per cent in just two trading sessions.

Meanwhile, Mr Arun Jain, chairman and managing director, Polaris told analysts during a conference call held on Monday that there would be a dip in the bottomline for Polaris during the second half of the fiscal due to higher sales expenses and merger costs. Topline is expected to grow by 5 per cent to 8 per cent on a sequential basis.

OrbiTech, which currently has a cash balance of $8-9 million (Rs 38-43 crore) is also expected to post the same topline growth as Polaris. We will ave much more clarity on the future guidance and other issues, when we host an analyst call on November 29, 2002, Mr Jain said.

The business from Citigroup for the merged entity, which currently stands at $75 million (Rs 360 crore), is expected to double over the next three years. Also, the company is aiming to reduce the Citigroup exposure from 58 per cent to 40 per cent during the period.