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%
- 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
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.
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 🙂