However, income growth rate has been slipping up during the last four quarters. The closing quarter of the last year clocked a growth of 141 per cent to slow down to 120 per cent in the next quarter and then to slide to 97 per cent for the quarter to June, 2000.

Polaris specialises in the provision of high-end solutions to financial services, banking and insurance industry. It has also launched its own product `Bank Ware' that addresses technology requirements of banks. `Polaris Point', another product, includes modules such as Internet banking, anywhere banking and mobile banking.

The banking industry accounts for around 60 per cent of the turnover. The share may go up as banks offer more value-added services. However, competition in the banking software sector has become intense and may affect future revenue as well as profit.

Operating profit margin has improved from 24 per cent to 26 per cent, lower than that of many IT companies, because of Polaris's weak bargaining position on account of its being a small player. Apart from a 75 per cent increase in operating expenditure, staff cost too is closer to that of the top rung companies.

Setting up of the web lab at a cost of Rs 7 crore has increased the depreciation cost to Rs 2 crore. This ate into net profit that went up 91 per cent to Rs 17 crore. The scrip touched Rs 432 on January 15, 2001, a sharp fall from Rs 1,613. If the downtrend continues, the scrip may nudge closer to its 52-week low of Rs 368.

Polaris has already made a foray into banking solutions. With an increase in IT spending by banking and insurance companies, there seems to be a vast market for the company's services and products. Its plan to spend around Rs 50 crore on developing software development centres bears testimony to this fact. However, margins may come under pressure because of too many players adding to competitive heat in this segment.

Global Trust Bank
Global Trust Bank's (GTB) showing during the quarter to Decmeber 2000 had no adrenaline to drive the scrip up, which spurted on rumours of a strategic stake in the bank by some FIIs in November, 2000. But, the rally could not be sustained for long.

The bottomline improved by 23 per cent to Rs 34 crore from Rs 28 crore in the corresponding quarter. Lower provisioning has come to the rescue yet again. This has been a trend in the earlier quarters as well. This includes other provisions to the tune of Rs 11 crore (Rs 19.6 crore). Interest earned to interest expended ratio has been steady at 1.2:1. Despite the lowering of cost of deposits. This is surprising since GTB had consciously cut down on the high cost certificates of deposits and fixed deposits as a ratio to total deposits. The easing of liquidity in the system has prompted the bank to cut its short term rates by 25-75 basis points. This would ease the pressure on spreads and the bottomline.

Interest income grew by 38 per cent during the quarter. While other income grew by 41 per cent, indicating that the quality of earnings is far from stable. The operating profit growth has been steady at 58 per cent having risen to Rs 75 crore (Rs 47 crore).

GTB has been sprucing up its act of late. Four separate profit centres have been crafted out as part of a restructuring exercise. This would provide a better focus to the retail business which contributes about five per cent of the income and is expected to contribute about 20 per cent to 25 per cent in the next three years.

Although a bit late in the day, the bank intends to venture into the credit card business by April 2001-02 which could provide a boost to the bottomline. Though these moves augur well, the bank would have to pull off a major coup to catapult it to the top bracket.

Prashant Kothari & Sachchidanand Shukla