RS Software is a medium size software company based in Kolkata. The company's major focus is on the online payment industry since it's inception in 1991. Apart from this, the company also indulges in development of application for Software companies.
Year
08-09
09-10
10-11
11-12
12-13
13-14
Sales
149.57
166.47
199.27
264.03
318.61
381.34
YoY Growth
11%
20%
32%
21%
20%
Net Profit
5.23
11.94
22.33
28.86
37.93
53.58
YoY Growth
128%
87%
29%
31%
41%
Margin %
3%
7%
11%
11%
12%
14%
3y CAGR
10.04%
16.62%
16.88%
13.04%
4yCAGR
15.27%
17.58%
17.62%
5yCAGR
16.29%
18.03%
The above table shows the consolidated revenue and profit after tax of the company in Rs Crores. The company has the 5Y CAGR ar 18.03% and the margin stands at 14% for FY 13-14. The sales have been growing >20% since 4 years now. The company is able to sustain it's margins with the growth.
Looking at the balance sheet of the company, the following are the highlights:
- The company is debt free
- The reserves of the company have gone up from just around Rs. 8 crores in 2008-09 to Rs. 163.03 Crores in FY 13-14.
- The equity of the company stands at Rs. 12.80 Crores
Valuation:
- The company's EPS for FY 13-14 is around Rs. 42.9, the P/E ratio is at 4.90 on 25th May, 2014
- The Dividend Yield of the company is 1.9% on 25th May, 2014
- Market Cap of the company: Rs. 250 Crores
- P/C Ratio: 4.43
- Price/Book: 1.49
The company will benefit from the growing online payment culture. Indian public is opening up to the idea of online payments steadily. RS Software boasts itself to be the "e-payment" expert.
Negatives:
- Promoter Shareholding is just 38.5%
- Of the 61.5% public shareholding, just 6.5% is of FII's and Mutual Funds.
- Retail Shareholders have a major holding
- Family Owned model
- Few projects have larger share of revenue
"We had a very good quarter and a good fiscal year. Our company is focused on a domain of electronic payment solutions and as a matter of fact for the IT outsourcing industry from India; the main focus companies are the ones that are projected to have the maximum benefit for the development of the market place. In the course of this year, we have done some excellent strategic work with one of our major stakeholders in acquiring processor in Europe. That particularly is responsible especially in Q4 to contribute to larger growth and this is expected to continue for the next several quarters to come."
Looking at the growth, margins, healthy reserves, zero debt and regular dividend paying nature of RS Software, one can expect good returns from the stock in the long run.
PS: This is my first post on this great forum and I apologies for any mistake of fact or any error from my side, I hope seniors and members will give their valuable feedback on the same and guide me to come up with many more posts. As a disclaimer, I am invested in this stock from the past 1 month.