Guys,
Is RS Software good to add here? It’s down Rs20 from peak (148)and near the previous peak support of 127. Apart from Visa and First Data, which are its other clients?
Saurabh,
Isn’t Nucleus Software better than RS Software ?
Regards
I prefer RS Software. The issue with Nucleus software is that even though they hold significant cash that has not been reflected in dividends or acquisitions. Plus banks have been going through bad times.
RS Software on the other hand caters to payment domain which is less impacted by downturn. Visa itself is strong and Warren Buffett had invested in them in Dec last yr. There have been concerns that they are too much dependant on Visa but Visa itself has three vendors and the chance of cutting one to rationalize is remote. Also they have added 2 clients and are cheap on PE terms and have better return ratios. And they have been hiring abroad as far as I know.
Only point to be confirmed is whether the June qtr results can be sustained and whether they were due to the new clients. Or were they due to some provisioning for earlier periods. This would be evident in Q2 results. If it is due to new clients then there should be more significant upside here. Another aspect to monitor would be if there is any dividend in Q2 like last year and if that improves.
Q2 most likely will be good. Why?
A- Do they hedge their forex? I think NO.
Hence,a 20% free ride (from INR-USD forex movement) will give a boost to the revenues. Though most of their employee cost is in USD only, still some free-ride will flow through to the EPS number, which Mr. Market wants.
Dividend will be maintained, i think. Would love it to be raised to Rs 1.5 or2.
The real challenge, I believe, will come whenexchange rate movesnegative for RS.
Our dear PN Vijaya has recommended this as his multibagger of the day
Results announced, the link is attached,
http://www.moneycontrol.com/livefeed_pdf/Oct2012/R.S._Software_(India)_Ltd1_091012_Rst.pdf
Standalone results look pretty decent, volumes grew, margins improved (very happy about it). Increment growth QOQ is satisfying,could they have done better? may be…
Views, analysis invited. Will take a detailed look in next couple of days and update here if I think its important.
Link: http://www.moneycontrol.com/livefeed_pdf/Oct2012/R.S.Software(India)_Ltd1_091012_Rst.pdf (India))_Ltd1_091012_Rst.pdf)http://www.moneycontrol.com/livefeed_pdf/Oct2012/R.S.Software Link: http://www.moneycontrol.com/livefeed_pdf/Oct2012/R.S.Software (India)_Ltd1_091012_Rst.pdf
satisfying,could
Decent set of numbers…
The surprising thing was the skipping of dividend… when there is lot of cash available on the books.
Tried to reach the management for this, but couldn’t reach.
You guys have any idea why no Dividend??
Jatin, probably you can try reaching Vijendra Surana, the CFO/CS - the other people are difficult to reach as they are based out of US. Else I will write to him next week.
These are good set of numbers and indicate that the dependancy on Visa should be down and the other clients also are contributing.
There are questions now that open up:
At what dollar rate are these numbers pegged?
What was the percentage of revenues from Visa?
Why no dividend? (My thought is during last promoter was buying from market and probably this could have been to facilitate the cash position. I might be entirely wrong here as this is just a guess from me.)
Saurabh,
What indicates that dependency on visa is down?
It implies that the revenue jump in the 1st and 2nd qtrs would be more due to addition of new clients that had happened. And thus the percentage of Visa in total top line and bottom line should be going down. Will write to them on Mon/Tue and check.
Also Sunidhi Securities has come out with this report with target at 250.
http://www.moneycontrol.com/mccode/news/article/article_pdf.php?autono=768160&num=0
Saurabh, Thanks for reply.
I am not able to reach. Request you to plz mail/call him & enquire about dividend.
Poor delivery percentage in and around 20% seems to me the real hindrance in doing any long term investment in RS Software. Otherwise RS Software and Infinite looks good for investment in midcap IT space.
The volume here on NSE and BSE together is around 1 million. If delivery volume is 20%, still there would be 200 thousand shares transacted both exchanges put together. For a 200 crore mcap company, I think its a pretty good volume. Compare this with Mayur, which is a 400 crore+ mcap company and volumes are hardly 3000 both exchanges put together. with even 90% delivery, the total volume is poor there.
Did anyone get a chance to speak to RS Software investor relations about thedecisionto not pay dividend? I would be happy if they have any plan to make good use of the cash…investing it…, else, they should pay investors.
I couldn’t…
Saurabh/ Others… Have you been able to contact them?
Have written to their CFO today.
Saurabh ji, did u get a reply on the dividend issue ?
No, there was no reply to my mail.
I’m still holding as Q3/Q4 results are beter than H1 for RS Soft.