Unknown

Read their annual report – It is crazy  rs_software_ar_2012-13_2

CMP – 243

MCAP – 309 cr

52w high/low – 250/120

No of shares – 1.28 cr ( further issue on cards )

Promoter holding – 38.5% un-pledged

Fundoo Investors – Dolly Khanna 3.29%

 

Story: 

  • Back end payment processing for Visa
  • Big on digital currency
  • Filed patent for customer acquisition (coupon prediction)
  • Big Data analyst
  • Security capacity trusted by the worlds best
  • Vendor switching a huge irritant of customers
  • Company works in an area of low tolerance of error

 

 

Digital Payments and currency to grow rapidly in the future

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Business Analysis:

 

Current Assets – 137cr

Current Liability – 15 cr

Cash on Books – 60-65 cr

Working Capital = 121 cr

Less Cash = 56 cr of which 46 cr are trade receivables

 

No major advances from customers, it is more likely that RS would have delivered the goods but not raised bills for the customers to pay.

 

Debt Free

 

Shareholders funds = 178 cr of which 65 cr is in cash. Effective investment = 133 cr

1 re of shareholder funds is creating 3.37 rupee of sales and 0.5 rupee of profit every year.

 

EBIT margin – 20%

PAT margin – 13.4%

 

PBT is more or less equal to the cash generated from operations.

 

DEBT FREE + CASH RICH + Good MARGIN +Predictable and Sustainable Cash flows + NETWORK SECURITY moats

 

The company is working out of low cost locations. The business is not in a monopolistic market or oligopolistc market, however, RSS is the only company that concentrates exclusively on Payments.

 

 

Prudent Banker Analysis:

 

Lending money only to those borrowers who do not need it.

 

Size – SME ( priority in this govt )

Cyclicality – Not really, payments are essential to life.

Interest Cover – No debt as on today

 

The company has an EBIT of 78 cr.

 

Debt Capacity without principal payments – 600 cr, MCap = 310 cr.

 

Debt Capacity >>>>>>>>> Current Debt

 

Smart Value investor – Ben Graham

 

Buying a business at less than debt capacity.

 

MCAP = 310 cr.

Cash on books = 65 cr

 

If i had say, 50 cr with me, maybe i should just try to buyout the entire company 🙂

 

 

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