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Multi Baggers

Hem Securities

5.30 AM Jan 1st 1970

RS Software

BSE ID : 517447     NSE ID : RSSOFTWARE

RECOMMENDED PRICE 430.00

PEAK FROM RECO 415.00 -3.49%

CURRENT PRICE 181.55 Resource id #17

RS Software has focused exclusively on the payments industry since its inception in 1991. The company has registered robust results for the quarter ending June 2014. We initiate a 'BUY' on the stock with a target price of Rs 600.

RS Software (India)

RS Software began its work in the payment industry 20 years ago and continues to leverage its early mover's advantage in this domain to strengthen its secular growth. 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.

The company has registered robust results for the quarter ending June 2014. The revenues from operations grew by about 10% to Rs.98.62 crores vs. Rs.89.92 cr. in the like quarter previous year. Operating profit climbed sharply by ~42% at Rs.22.94 crores as against Rs.16.17 crores in the previous year quarter. The adjusted net profit stood at Rs.15.82 crore for the quarter as compared to Rs.10.19 crore; registering a growth of ~55%. On the margins front, operating margin climbed about 528bps at 23.26% as against 17.98% while net profit margin expanded 471bps at 16.04% from 11.33% y-o-y.

Revenues from USA grew sharply by approx. 17% at Rs.91.07 crores from Rs.78 crores in the corresponding quarter last year; contributing 92.34% to the total revenues for the quarter. Rest of the World (ROW) revenues dipped by about 37% at Rs.7.55 crores; contributing by just 7.66% to the total revenues.

Valuation

With robust business model, strong fundamentals, debt-free status, wide market presence, esteemed clientele and growing electronic payment industry; RS Software Ltd. growth prospects and profitability looks optimistic. We believe the company is trading at an attractive valuation at 8.38x and 6.97x of FY15EPS of Rs.51.33 and FY16EPS of Rs.61.67. We initiate a 'BUY' on the stock with a target price of Rs.600 (appreciation of about 40 percent) with the medium to long term investment horizon.

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Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

RS Software_Multibagger_HemSec.pdf

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