Polaris Software was the butt of disdain early today after a drop in net profit in Q4 was squarely off analysts' expectations.

The scrip of the software major flopped 10% on BSE to Rs 105 barely as trading commenced . It hit a low of Rs 103.45 in the mean time. Around 2.2 lakh Polaris Software (PSL) shares have been traded on the counter on BSE so far.

The stock was characterised by a sluggish trend of late after a sustained fall over the last few months. And, in recent sessions, has persisted in the Rs 110-135 range. With today's fall, the stock breached the lower end of that range.

For Q4 ended 31 March 2003, PSL posted a net profit of Rs 15.11 crore compared to a net profit of Rs 16.01 crore in the corresponding period last year. However, the results for the two periods are not comparable as the current quarter's results denote the merged entity (Orbitech Solutions has been merged with PSL). Evenso, the results come in much below market expectations. Analysts had expected the consolidated PSL to post a net profit of Rs 25 crore for Q4.

total income has gone up to Rs 142.27 crore in Q4 ended 31 March 2003 from Rs 67.97 crore in Q4 ended 31 March 2002. This, too, falls below expectations. Analysts had forecast net sales of Rs 161.20 crore.

For FY 2002-03, PSL posted a net profit of Rs 54.23 crore compared to Rs 61.64 crore in the year ended 31 March 2002. Total income has gone up to Rs 401.74 crore in FY  2002-03 from Rs 283.93 crore in FY 2001-02.

Arun Jain chairman and managing director, Polaris Software Lab, said, " I am extremely happy to see the process of merging the two companies coming to a closure. The cost of operations is expected to be higher in the post-merger scenario for a few quarters. We will also be incurring higher sales and marketing costs for supporting product revenues from Orbione. The next nine months or so will be defining moments in the growth of the company. Our business teams are moving full steam ahead in transforming the company in line with the changing business scenario and equipping it to meet global challenges. For the next three or four quarters, we will be under pressure to perform and make the merger work for generating greater shareholder value."

PSL is a major player in the BFSI (banking, financial services and insurance) space. The company offers solutions in corporate banking, retail banking, trade finance, credit/risk management, cash management, treasury management, lending, investments and securities, mutual funds, credit cards and insurance. Citibank is among the top clients of the company. Its other high profile clients are UBS Warburg and Shinsei Bank.

A few months ago, PSL entered into a joint venture with AIG for developing software solutions for the insurance sector. Notably, this joint venture currently has around 150 people, which will be ramped up to around 1,000 in the next three years.