I came across RS Software in businessworld where they were listed in the high ROCE cos. list. Had ignored looking earlier but they have been hiring consistenly specially in Oracle Apps that I’ve seen in ads etc.
RS Software is a Kolkata based IT company focussing on electronics payment domain. They have their own products which they sell as solutions. From what I have gathered they have their own 9 floor building in Sector 5 Salt Lake, Kolkata.
Some of the clients they have served is Visa, Visa EU, Visa CEMEA, Maclane, Pemco, Vignon.
MCap ~ 61 cr.
TTM EPS 22.94
Div Yield 3.58
FY07 FY08 FY09 FY10 FY11
ROCE 23.71 12.06 27.3 44.11 68.59
ROE 22.17 2.61 18.55 41.79 57.08
Sales 101.67 100.36 149.57 166.47 199.27
NP 4.46 0.74 5.23 11.94 22.33
EPS 6 0.99 6.83 14.72 19.91
Sep-11 Jun-11 Mar-11 Dec-10 Sep-10
Sales 64.71 56.51 53.02 51.41 49.98
NP 6.3 5.01 6.9 6.43 4.95
EPS 5.71 4.54 6.26 5.83 4.47
Emp cost 42.48 41.69 35.87 32.41 33.29
Became debt free last fiscal and also paid a dividend.
As of Sept, good reserves and surplus of 48 cr, cash of 4.66 cr, net current assets of 53 cr. and investments of 3 cr. This is against a market cap of ~61 cr. If the numbers are not cooked then these numbers seem quiet good.
PE, EV/SAles, EV/EBITDA, MCap/Sales are quiet low and to me it looks a value buy at this stage.
Margins have improved last few years with NPM in FY11 at 11.21 and OPM at 16.42.
Free cash flow of 15 cr. was generated in FY11. This also has been increasing last few years.
The return ratios are impressive and have grown in the last few years.
Dependant heavily on a single client Visa. Visa is served by CTS and IBM also in this domain. RS Software’s relationship with Visa is 19 years old
Low promoter holding at ~ 28%. However the promoter has increased stake by buying from mkt in Sept this year.
The core group of the company sits in US, am not aware of any corp. governance issues. Though in 2000 the stock price had been quiet high and after that has always been in a range in the last 8-9 yrs.
These are the only 2 reports I’ve come across:
They had done a tie-up with Microstrategy for analytics last year.
They have developed a payments lab where prominent people from the payments domain have visited. In India the key driver for mobile can be if RBI promotes it and can benefit RS software.
Would appreciate any inputs here. I’ve bought some at ~ 55 levels. The numbers look too good to me.