Mumbai: Banking and insurance software provider Polaris Software Lab Ltd registered a 37% growth in its consolidated net profit, helped by new client wins for its flagship product.
However, gross margins declined to 24.25% from 33% a year ago, partly due to addition of 965 employees during the quarter.
“Last quarter, demand was higher than what we were able to fulfill,” chief executive officer Arun Jain said on a conference call, while talking about the employee additions. “Obviously, it increases our cost burden.”
The company expects to incur capital expenditure of Rs500 crore to Rs600 crore for the rest of the financial year, R. Srikanth, chief financial officer, said on the call.
For the second quarter, Polaris posted a consolidated net profit of Rs481.5 crore on sales of 3.88 billion compared with a profit of 351.9 million on sales of 3.3 billion a year ago.
Intellect, the company’s flagship product, registered 17 wins during the quarter, with revenue from the business growing 45% in dollar terms.
Intellect is a web-enabled, multi-currency and multi-lingual software for retail, corporate and investment banks.
During the quarter, banks in the US, Canada, Japan and Egypt started using the product. India’s SBI Mutual Fund also started using Polaris’ Intellect.
Deal sizes for Intellect range from $250,000 to $5 million, Polaris said.
The company said it is focusing on accelerating licence revenue and services linked with Intellect implementations.
Polaris plans to expand and take Intellect to geographies such as Africa, Sri Lanka, Bangladesh and Vietnam, Jain said.
Shares of the company closed down 0.75% at Rs172.90, while the larger market ended down 0.92%.