RS Software (28 July,2014)

Sector: Automobiles
Sensex:	26126
CMP (Rs):	381
Target price (Rs):	480
52 Week h/l (Rs):	402/110
Market cap (Rs cr):	487.48
Avg volume	114964/337600
FV (Re):	10
BSE code:	517447
NSE code:	RSSOFTWARE
Prices as on 26 July, 2014

 

Company Overview:

RS Software has focused exclusively on the payments industry since its inception in 1991.

Its payments expertise has helped clients address the convergence of payment types, the proliferation of mobile devices, the move to cloud computing and the introduction of new strategies, such as behavioral targeting. No other custom software provider delivers more industry-specific knowledge and experience to organizations competing for market share in the payments space.

RS Software has built solutions for the introduction of new standards such as EMV and new technologies such as mobile and contactless payments while mitigating the pain and cost associated with the legacy systems supporting them. They offer a comprehensive range of services – custom application development, quality assurance, testing, maintenance, support and strategic consulting – with an emphasis on availability, scalability and security.

Shareholding pattern
March ‘14	(%)
Promoters	38.5
Institutions	5.1
Public & others	56.4

 

Quarterly Result updates:
R S Software India Ltd is engaged with the world’s largest payment card association/ network & working for leading payment processor in US & UK. The company has a record year, posts highest ever revenues and profit. Reported its financial results for the first quarter ended 30 JUNE, 2014.
The Net sales of the company rises to Rs. 986.20 million for the 1st quarter of the current year 2014-15 as against Rs. 899.20 million in the corresponding quarter of the previous year. The company has reported an EBITDA of Rs. 253.80 million and increase of 38.76% when compared to corresponding quarter of the previous year.
 In Q1 FY15, net profit ramps up by 55.26% to Rs. 158.21 million against Rs. 101.90 million in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 12.36 for the June quarter as against an EPS of Rs. 8.41 in the corresponding quarter of the previous year.

Performance rel. to sensex
(%)	Opm	Npm	EPS
RS Software	27.48	17.50	12.35
Polaris	7.73	4.55	2.29
Core Projects	-221.7	-285	-32.3
Subex	-11.68	-36.5	----

Highlights the fact:
* R.S. Software India Ltd is engaged with the world’s largest payment card association/ network & working for leading payment processor in US & UK.
* The company posted a growth 55.26% in net profit at Rs 158.21 million for the quarter ended June 30th, 2014 against Rs. 101.90 million in June 30th, 2013.
* The company’s net sales registered 9.68% increase and stood at a record Rs. 986.20 million from Rs. 899.20 million over the corresponding quarter last year.
* Profit before tax (PBT) at Rs. 234.50 million in Q1 FY15 compared to Rs. 170.00 million in Q1 FY14, registered a growth of 37.94%.
* The company has declared interim dividend of 10% per share on face value of Rs 10.00 each for the Financial Year 2014-15.
* The company’s Revenue comes from USA business of Rs. 910.70 million in Q1 FY15 compared to Rs.780.00 million in Q1 FY14.
* Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 28% over 2013 to 2016E respectively.

VALUATION & OUTLOOK:
At the current market price of Rs. 382, the stock P/E ratio is at 7.5 x FY15E and 6.48 x FY16E respectively.
Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.54 and Rs.61 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 28% over 2013 to 2016E respectively.
On the basis of EV/EBITDA, the stock trades at 4.18 x for FY15E and 3.44 x for FY16E.
Price to Book Value of the stock is expected to be at 2.1 x and 1.61 x respectively for FY15E and FY16E.

CONCLUSION:
We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.480.00 for short term to Medium term investment.