Polaris up on counter claim in US suit

CHENNAI: Shares of Indian software firm Polaris Software Lab Ltd. jumped over

14 per cent on Wednesday with analysts attributing the rise partly to the firm's

decision to file a counter claim in a US acquisition-related lawsuit.

They also cited attractive fundamentals for the rise. At 2:10 pm (0840GMT),

Polaris shares were quoted 14.61 per cent or Rs 77.45 higher at Rs 607.50, while

the 30-stock benchmark Bombay exchange index was 1.38 per cent higher at

4,277.79 points.

"It's the news on the company's decision to file a counter in the Data

Inc lawsuit which the market appears to have reacted to with a lot of

institutional buying," K Sivakumar research head at Cholamandalam

Securities said.

The Chennai-based firm said late on Monday it had filed a counter claim

seeking damages in a lawsuit filed by US software firm Data Inc following

Polaris' decision in October to call off its proposed acquisition of the US

firm.

Polaris had abandoned the $21 million cash-and-stock purchase following

objections from its audit committee. The Montvale, New Jersey-based Data Inc had

earlier filed a suit in a US court against Polaris and its chairman and majority

shareholder Arun Jain, seeking compliance with the original deal and

compensation for deal-related expenses.

Sivakumar said buying in the share was linked to fundamentals as well, with

the share trading at an attractive PE of under 40 based on an estimated EPS of

Rs 16 for the year to March 31, 2001 and an assumed current price of Rs 600.

"It's a very attractive PE multiple for a firm that has posted sustained

growth of over 100 per cent since 1995 and has reduced business risk by

expanding its client profile, so once the case is resolved there should be

substantial upside to the stock," Sivakumar said.

At Rs 607.5, the share is 62.3 per cent below its calendar high of Rs 1,612.5

struck on February 23 before a recent stock split, but is 62 per cent above its

year's low of Rs 375.05 touched on October 24.

(C) Reuters Limited 2000.