Buy RS Software; target of Rs 191: Firstcall Research

Firstcall Research is bullish on RS Software (India) and has recommended buy rating on the stock with a target of Rs 191 in its November 19, 2012 research report.

“RS Software Ltd has focused exclusively on the payments industry since the inception in the year 1991. It expertise has helped clients address the convergence of payment types, the proliferation of mobile devices, the move to cloud computing & introduction of new strategies, such as behavioral targeting. The software provider delivers more industry-specific knowledge and experience to organizations competing for market share in the payments space. R.S Software's India Ltd over 20 years of engagement with the world’s largest payment card association/network & working for leading payment processor in US & UK. In depth understanding of core Bankcard domain applications like Transaction Authorization, Clearing & Settlement etc. The company has ability to scale up and manage large applications (Development, Maintenance, Testing, 24/7 Support…) for Payment Industry companies. RS Software delivers unmatched payments expertise to a client list that includes the world’s leading payments brands. Our company has successfully provided solutions to customers throughout the world proving our payments-focused project methodology in a variety of regulatory environments.”

“The global delivery model and knowledge transfer disciplines ensure that RS Software’s cross-culture experience enables maximum value to the customer from start to finish. RS Software has built solutions for 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. It offers a comprehensive range of services – custom application development, quality assurance, testing, maintenance, support and strategic consulting – with an emphasis on availability, scalability & security. R.S Software's expansive knowledge and experience within the payments space is second to none. In the past 20 years, the company has grown with global leaders in the electronic payments industry. It has made possible through deep engagement in the client's business space, backed by strong application Management fundamentals that continue to power the company core execution engine.”

“R S Software India Ltd is engaged with the world’s largest payment card association/ network & working for leading payment processor in US & UK, reported its financial results for the quarter ended 30th Sep, 2012. The second quarter witnesses a healthy increase in overall sales as well as profitability of the company. The company’s net profit steers to Rs.94.80 million against Rs.63.00 million in the corresponding quarter ending of previous year, an increase of 50.48%. Revenue for the quarter increase 29.42% to Rs.837.50 million from Rs.647.10 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.8.27 a share during the quarter, registering 44.70% increase over previous year period. Profit before interest, depreciation and tax is Rs.142.40 millions as against Rs.90.80 millions in the corresponding period of the previous year.”

“At the current market price of Rs.169.00, the stock P/E ratio is at 5.33 x FY13E and 4.26 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.31.69 and Rs.39.68 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 27% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 1.82 x for FY13E and 1.42 x for FY14E. Price to Book Value of the stock is expected to be at 1.56 x and 1.14 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.191 for medium to long term investment,” says Firstcall Research report. 

Non-Institutions holding more than 90% in Indian cos

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