Buy RS Software; target of Rs 236: Sunidhi Securities

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26 Aug, 2025 12:21

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"RS Software (India), during Q3FY14, net profit after minority share has gone up 57.6 percent to Rs 13.4 crore on 21 percent higher revenue of Rs 94 crore. OPM and NPM stood at 23.6 percent and 14.9 percent Vs 16.1 percent and 11.5 percent respectively in 9MFY13. Q3FY14 EPS stands at Rs 10.5. During 9MFY14, consolidated net profit after minority interest rose 30.4 percent to Rs 35.2 crore on 19.3 percent higher sales of Rs 288.7 crore. OPM and NPM stood at 22.0 percent and 12.2 percent Vs 18 percent and 11.2 percent respectively in 9MFY13. 9MFY14 consolidated EPS stands at Rs 27.5. An interim dividend of 10 percent has been declared against 25 percent paid in the previous quarter. A 35 percent was paid for FY13."

"During FY13 and 9MFY14, USA accounted for 87 percent of sales whereas ROW (rest of the world) 13 percent of revenues. Domestic revenue accounted for just 0.4 percent of total sales. RSSIL sees demand recovery in the U.S. which bodes well for its business given its exposure to the market. RSSIL continues to put significant thrust on innovations and in building competencies through the Payments Lab and School of Payments. RSSIL is confident that given the improving market conditions and the potential growth in the electronic payments industry, it will consistently tread a high growth trajectory."

"RS Software has built solutions for the introduction of new standards such as EMV and emerging payment areas like mobile and contactless payments, while enhancing the ability of its clients to manage their legacy systems. The domain focus makes RS Software a partner of choice for its customers and an employer of choice for its employees."

"RSSIL is building a robust global sales engine that complements the high priority accorded to the company's dominant customers and leveraging at the same time unusual growth potential. Longer term operational and strategic planning is being put in place. RSSIL’s sustained focus on merchant acquiring aspect of the payment landscape, procedural improvements in CRM, focus on e-mail marketing to generate strong business response and undergoing initiatives to strengthen the team and process - all give strong revenue visibility going forward."

"At the CMP of Rs 175, the share is trading at a P/E of 4.6x on FY14E and 3.9x on FY15E. We reiterate BUY with an increased target price of Rs 236 in the medium-to-long term at which the share will trade at a P/E of 5.2x on FY15E," says Sunidhi Securities research report.

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