Polaris hits 52-week high as board approves demerger of products biz

Polaris Financial Technology jumped 9.35% to Rs 200.50 at 10:45 IST on BSE, with the stock extending recent rally triggered by the company announcing the demerger of its products business into a separately listed company.

Meanwhile, the BSE Sensex was down 32.49 points, or 0.15%, to 21,800.37

On BSE, so far 15.47 lakh shares were traded in the counter, compared with an average volume of 3.21 lakh shares in the past one quarter.

The stock hit a 52-week high of Rs 204.70 in intraday trade today, 20 March 2014. The stock hit a low of Rs 186 so far during the day. The stock hit a 52-week low of Rs 96.10 on 14 May 2013.

The stock had outperformed the market over the past one month till 19 March 2014, rising 30.92% compared with the Sensex's 5.36% rise. The scrip had also outperformed the market in past one quarter, gaining 42.8% as against Sensex's 5.43% rise.

The small-cap company has an equity capital of Rs 49.77 crore. Face value per share is Rs 5.

Shares of Polaris Financial Technology surged 46.4% in three trading days from Rs 136.95 on 14 March 2014. The gains were triggered by the company's board giving an in-principle approval for demerging the products business undertaking of the company into a separate listed firm at its meeting held on Tuesday, 18 March 2014. The company made the announcement during trading hours on Tuesday, 18 March 2014. Shares of Polaris Financial Technology jumped 11.57% in a single trading session to settle at Rs 152.80 on Tuesday, 18 March 2014. The scrip rose by maximum permissible level of 20% to Rs 183.35 on Wednesday, 19 March 2014. .

The scheme/structure is subject to the approval by the various regulatory authorities like stock exchanges, Securities and Exchange Board of India (Sebi), Madras High Court, Registrar of Companies, shareholders and creditors, Polaris Financial Technology said in a statement.

After demerger, the product company will be known as Intellect Design Arena (Intellect) and comprise of four distinct businesses: global universal banking; risk and treasury management; global transaction banking and insurance, the company said in a statement.

Polaris Financial Technology said it will continue to run the services business with a strong vertical and solution focus. As consideration for the demerger (technically called a vertical split), every shareholder of Polaris Financial Technology, will receive one share of Intellect.

The product business is significantly different from the services stream, in terms of investments into product development, talent and sales & distribution. Given this, the Polaris board, taking into consideration the recommendations made by the Special Committee comprising of independent directors of the Board as well as the Audit Committee, has decided to offer a special option to the shareholders of Intellect to exchange the shares (should they wish to) allotted pursuant to the demerger against fully secured non-convertible debentures (NCD). These NCDs shall have a face value of Rs 42, with a coupon of 7.75% per annum, redeemable at par after 90 days.

On a consolidated basis, Polaris Financial Technology's net profit fell 15.13% to Rs 50.76 crore on 0.68% growth in net sales to Rs 614.24 crore in Q3 December 2013 over Q2 September 2013.

Polaris Financial Technology is a global leader in financial technology for banking, insurance and other financial services.

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