Wednesday 12 November 2014

Trade4target : The aspects of markets and RS Software ltd


The aspects of markets:-
Trade4target is introduce to RS software ltd and give stock tips to the investors.Last week a member was promised a detailed note about the so called 'Opportunity cost'.OC simply put would be the cost of an alternative that must be forgone in order to pursue a certain action.Put another way, the benefits you could have received by taking an alternative action.OC relates much to the value investing aspect where you opt for deep value counters in place of growth counters thereby availing yourself a long waiting period.A growth stock may well double or triple but chances of the same happening to a value stock remains low.
Story: Founded by the US based entrepreneur Raj Jain, RS began with a clear vision of providing quality software services to international markets. The company researched and instituted global best practices in the areas of People Management and Process Architecture to build a world-class organization. With rigorous attention to world standards, the company acquired ISO 9001:2000, SEI CMM Level 4, P CMM level 3 and ISO 27001:2005 certifications.RS Software is a Kolkata based IT company focussing on electronics payment domain. They have their own products which they sell as solutions.Playing a pivotal role for the Payment Industry, RS has developed and maintained mission critical applications for leading Payment networks in North America, Japan and UK. RS Software’s offices are located in the US, Canada, UK and India, employing over 1000 professionals to deliver high quality solutions for Payment networks, Processors, Acquires, Issuers, and other Payment Industry companies.Today RS Software is on course to be the leader in using its domain expertise to enhance the most powerful Payment Networks globally, and provide leading edge technology solutions to all stakeholders in the Payments industry.

Trade4target : Stock idea

Scripscan:RS software ltd
Traded in:Nse-bse
CMP:230 Rs.
Target:300 Rs.
Duration:6-9 months
Return percentage:30%

Numbers : Company has grown at CAGR of 24 percent in revenues for the last 5 years.PAT has seen a massive CAGR jump of 53 percent.Company delivered consolidated revenues of 381crs in fy13-14 vs 317crs in fy13-14.PAT jumped to 51crs vs 35crs in the same period.OPM and NPM stood at 22.0% and 14.0% Vs 17% and 11.9% respectively in FY13.The company is expected to grow 22-25% in the present fiscal.Reveneus should increase to around 470crs,PAT is expected to inch up to 64crs.EPS will stand at over 50rs for fy14-15.

Conclusion : RS software is an amazing play on the e-commerce boom.This fine business boasts of 30%+ ROE does not burden the oarsman.Debt too is nothing leaving balance sheet squeaky clean.The company has generated free cash flow year after year.The marketcap of the company is only 295 crs.As at 31 March 2014,the cash &cash equivalent including deposits and investment stood at 61.5 crore or 48 per share.Thus we are getting the company for just 230crs.The dividend declared for the year has been 6 rs per share.A debt free, dividend paying company which has been a consistent performer over the last several years operating in a sunrising industry, commanding a trailing PE of less than 6 is a massive bargain for the investors planning to own a pie of it.The company is expected to deliver an EPS of 50 for fy14-15.Keeping the same trailing PE of just 6 for fy-15,helps me to arrive at my target price for the counter.Its still an unnoticed gem which whenever gets attention would move on to a different orbit.One can safely buy it for solid returns in the coming months and years.

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