We are strongly positive on Polaris Softwares Lab and recommed buying at CMP of 171.
POLARIS software which is a niche plauyer in BFSI domain trades at a PE multiple of just 8.75 based on expected FY-11 EPS of Rs. 20. Vis - a Vis bigger player it is trading at a very significant discount and should give decent returns in next 3 to 6 months time frame.
One can look for an immediate target of Rs 200 in 1 month time (15% Appreciation) and a target of Rs 240 in 3 months time (38 % Appreciation). Slightly longer term investors can invest for the price target of Rs 320 within 1 year. The 1 year target is based on a PE multiple of 14 times on FY -12 estimated EPS of 23.
MIDCAP IT companies are expected to do well in FY-11 and POLARIS being a undervalued nice MIDCAP IT Company should benefit from the overall sector rerating.
Technicall also the stock has bottomed out at 145 and has been on uptrend since last 1 month. We believe todays correction is because of unwinding of F&O position across all the companies and hence is a good opportunity to accumulate the stock at the current level of 170 - 171.
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