Varadha,
For a like-to-like comparison, you should also remove interest income from PAT for this calculation.
Even after that, problem is that we are assuming cash to be utilized effectively by the management, which unfortunately they are not using for last few years.
Hence, conservatively, we may need to do a haircut to the cash also.
But what about lycos internet since youâre so bullish on RS? Much better fundamentally.
Lycos internet was called ybrant digital earlier - lots of governance issues including a SEBI fine.
Grapevine is that their numbers have been massaged.
@varadharajanr If one reads the article carefully, we can notice that :
(1) SEBI action was on a few stock brokers/traders who were playing around with Lycos stock by doing trades within themselves, there is nothing to indicate the management was involved in any way.
(2) Even if one assumes management was involved, these trades pertain to the period 2009-2010 when the company was still LGS Global. In 2012, Ybrant bought over LGS Global and the Ybrant management is now running the show completely. So there is no basis to accuse the current management of any wrong doing, from this article at least.
Will be grateful if you can highlight any more instances of the governance issues in Lycos you mentioned, particularly with the new management if any. I have been looking around for some proof of this grapevine that Lycos numbers are fudged, management is not good etc. but cant seem to find anything at all.
Disc - invested in both RS and Lycos.
PS - This is RS forum so I didnt want to post about Lycos and take the discussion on a tangent, but I didnt know how to post this in Lycos forum and cross link in some way so that it shows here too - experts may pls guide!
Another qtr of trashy results. Both topline and bottomline are lower than same qtr of previous year as well as sequential qtr. This one is going to test a new low.
Totally, itâs gonna be a âWinter is comingâ and âAll men must dieâ situation tomorrow!
Disc: Invested at lower levels but even that sounds like a huge price now.
This is exactly what i was worried about. Now with Cost advantage of moving to offshore is gone, they have nothing to boost their margins except the TOPLINE growth. Now it would be interesting to see what Mr. Raj Jain has to say specially because he was hiding behind the margin improvement for the last 4 quarters atleast.
Best
Mr. Raj should have communicated about the ongoing pressures on the topline. It may again become a buy but only if the management comes out with honest outlook on future.
For now I am happy that I exited at 265/- (at negligible profit) the day it had an intraday bounce from 240/- to 270/- only to close below 240/- again by the end of the day.
Latest interview from R Jain.
http://economictimes.indiatimes.com/opinion/interviews/plan-to-make-first-acquisition-in-3-6-months-to-move-to-recurring-revenue-strategy-raj-jain-rs-software/articleshow/48015526.cms
Amazing how he finds something or the other going up every quarter when asked about revenue growth.This time Net Worth and Cash Flow went up according to him.
He also claims top line reduction is a consciously executed strategy 
and the same M&A story.Clearly stating they have pressure from VISA to reduce onsite execution and diversifying would take some more time would have been much more acceptable to me 
The same beating about the bush that heâs been doing for ages now. I wonder why he keeps on appearing for interviews when he has nothing specific to talk about and only wants to beat the same drum again and again sidelining the interviewerâs specific questions? And he seems to have many drums which basically sounds the same, You see, Net Worth, Cash Flow, Margins, Bottomline? Why canât he just follow Charlie Munger and say nothing when he has nothing to say?
Disc: Exited 2 quarters back after listening to the same commentry(drum)
If youâre betting on a company with essentially just one customer, the bet is on stable long term revenues. With such a drastic fall in revenues, itâs unclear when/if RS will ever have good numbers and how because presumably theyâve lost a large part of work from visa.
Since my investment thesis has been proven wrong, I have exited.
Itâs not only the fact that RS has huge dependency over one client but also how the mgmt is taking investors for granted and not disclosing even materially signifanct info. to them like some agreement signed with VISA which till sometime back prevented them for pursuing other clients. Donât you think itâs a huge thing? They also have issues disclosing their clients. Raj Jain comes on media and talks about all the same generic stuff again and again. You ask him some specific question and he will evade the question. He wonât talk about his concrete plans with regards to huge cash sitting on the books, bonus, one big interim dividend, progress on M & A etc. And if, as he claims, RSS has such a great experience in payment domain why canât they bag more clients even after so long? why canât they come out with their own payment gateway like Paytm, Mobikwik etc? Payment Industry has huge tailwind currently, Isnât it?
Actully, I entered earlier into this at an avg. price of 200 pre-rally, and it went upto 800 only to fall back to current levels. Observing the playing field carefully and not seeing any progress on the same I exited it 2 quarters back. IMHO, with this kind of mgmt, the only MOS is price.
this is raj jainâs interview - I made a mistake on this - no two ways around it. Bombastic talk and perpetual plans for the future cannot insulate a minority shareholder from a management which refuses to see barriers ahead on the road and finds new routes after a crash each time.
RS is what I would call a remote control car business - like toy remote car, go and crash against a wall - turn tortoise - reverse and then go full steam into another wall. Rinse and repeat the process.
Great managements are those who can predict these and fill in gaps ahead of the gaps forming - an average management is one which fills the gap even as they are being formed - a bad one is one which waits for the gap to emerge and then searches for soil to fill it in.
RS is somewhere between the last and the second. Not disclosing exclusivity with visa, motherhood and apple pie talk and skirting questions by giving macro economic answers are all signs.
I plan to exit on a pop -lesson learnt - pay a little more for quality.
RS has been there in IT industry since ages. Many peers became billion $ company but they couldnât scale up. Those who could not anything when IT was enjoying the tailwind will deliver when there are huge headwinds is doubtful. Similar stories are Polaris, Mastek, Sonata etc.
We need to be very cautious buying such stories unless there is a significant management change and results are shown for a longer duration. Else use it just as a trading bet.
National Payments Corp involving RS in digital payment platform
http://economictimes.indiatimes.com/tech/internet/national-payments-corporation-of-india-taps-rs-software-to-build-digital-payments-enablement-platform/articleshow/48189685.cms
And the news comes thru public media and not thru CA on exchanges. What about the deal order size? Will RJ give this details to investors or is it confidential?
Deal Size is 3.47 Crores.
"With reference to the earlier announcement dated July 24, 2015, regarding Clarification on Increase in Volumes, R.S. Software (India) Ltd has further clarified to BSE as under:
"The National payments Corporation had awarded a contract four weeks ago on June 26, 2015 to RS Software (India) Limited, the value of the same is Rs. 347.71 Lacs, inclusive of all taxes.
In this context, we would like to clarify that in past also we were awarded contracts of similar and larger values by various clients globally in the ordinary course of business. The contracts being in ordinary and usual course have not been considered as information to be notified to the Stock Exchanges."
Thanks Anindya. This is materially insignifant deal. Last TTM they have sales of 376 cr. This deal of 3.47 cr. is not even 1% of that bcz of which mgmt is not excited and didnât care to notify the exchanges and market in its fancy has overreacted by increasing mcap by 22% or 90 cr. Asinine!
Well I will read it as slightly significant strategically (at least in my head). Since we have finally started to see some âbaby stepsâ towards long promised diversification. At this stage I more interested in counting âNew Clientsâ added, and believe that larger cheques (revenue) will follow.
I invested in this and got out after Q1 results. What got my goat was that till FY12, they were exclusive with visa and he never disclosed it. thatâs ridiculous
Everytime someone asks him about issues, he comes up with something that is positive - last quarter, he said their net worth and cash had grown. Before that he said profits had grown (when sales was not growing).
It seems like he is in denial all the time and tom tomming the good part alone - such guys who obfuscate and deny the truth might not deliver a lot of enduring value.
