Polaris Financial Technology (Polaris) announced demerger of its Product (Intellect) into an independent entity. As consideration for the demerger, every shareholder of Polaris will receive one share of Intellect. The company will be filing the 'Scheme of Demerger' with SEBI and High Court as per extant regulations.

Commenting on the same, Prabhudas Lilladher said, ''The board has approved the split of Polaris into Services (77% of revenue) and Product (23% of revenue) as per Q3FY14. Product contributes 26% of group EBITDA. Product business grew at a CQGR of 2.9% over the last four quarters, whereas Services business was muted.

Polaris trades at 5x FY16 earnings estimates, one of the lowest in our coverage universe. We believe the improving demand environment would improve revenue momentum for both Services and Product business. Reiterate 'Accumulate' with near-term upside in the stock price.''

The stock broker has reiterated 'Accumulate' on Polaris Financial Technology with target price of Rs 190 as against current market price (CMP) of Rs 153 in its report.

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