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Sunday, January 1, 2012

R S Software (India) Ltd:-Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

Scripscan:R S Software (India) Ltd

Story:RS Software is a Kolkata based IT company focussing on electronics payment domain. They have their own products which they sell as solutions.Some of the clients they have served is Visa, Visa EU, Visa CEMEA, Maclane, Pemco, Vignon.It 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 48 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.However on the negative side its depends 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.Also the present promoter holding is quite low at 28%.However the promoter has increased stake by buying from mkt in September this year.They have also set up a payment lab in Kolkata and are focussing on mobile payments. From what I gather there is a solution here that they are working on which has patent pending.Their engagement with Scott Loftesness would be regarding, he is considered an expert in this domain.The stock might not have moved in the last few years because early investors like WBIDC etc. would have exited and hence liquidity might have been high. This is again a guess, I might be incorrect here.With the cash and ROE they are generating if they are able to maintain then next year can probably see a good dividend or an acquisition both of which should augur well for the company.

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