R Systems – Multibagger Analysis
R Systems, founded in 1993, is a specialized IT Services & Solutions and IT-enabled Services provider catering to a wide range of global customers. We are endowed with some of the industry’s highest quality certifications and standards, including SEI CMMI Level 5, PCMM Level 5, ISO 27001:2005 and ISO 9001:2008. Our IT services and solutions span five major verticals which include Telecom & Digital Media, Banking & Finance, HealthCare, Manufacturing & Logistics, and Government Services.
Warren Buffett Checklist
|History of Consistently Increasing Sales, Earnings & Cash Flow||Yes.|
|Durable Competitive Advantage||
Okay. Company is not a big player; No niche segment share.
|Future Growth Drivers||Good. For next 2-3 years IT should provide good growth.|
|Conservative Debt (long term debt < 3 Net Profit)||Yes. 100 crore is current liabilities, net profit 69.|
|Debt Equity Ratio||Good at 0.|
|Return on Equity must be Above Average||25%. Impressive|
|Low CAPEX required to maintain current operations||Good.|
|Management is holding / buying the stock||Flat. Indian Promoters increasing stake, Foreign Promoters selling few in past 2-3 years.|
|Price is Under Valued (< intrinsic value)||Yes.|
|Stock Price is consolidating (now)||Yes.|
|Stock Price is growing in past years along with EPS growth||Okay.|
Additional Futurecaps Checklist
|PE, PB Ratio||Consolidated PE: 9 (good); Standalone PE: 17; PB 2.5 (little high)|
|Cash Flow Positive, Net Profit % greater than 8%||Yes. NP% around 20% of Sales.|
|Paying Dividends, Tax||Yes.|
|EPS Growth Rate||30% to 100% in past 1-2 years.|
|Jump in Trailing EPS||Yes. 30%|
|Jump in Quarterly EPS||Yes.|
|Expected Gain in 10 Years||10-12X in 5 years considering 30% as average EPS growth & PE resizing in 5 years to 20 (IT standard) – If current growth level is maintained.|
|Volume Analysis||41 thousand. Good to catch fire.|
|Power of Brand||Company is building around product brands.|
|Corporate Governance, Reputation of Leaders||Good.|
|Fraud reported||Not in current serach.|
Considering the historical growth & on the grounds of value-analysis Futurecaps declares R Systems as a Multibagger. Be watchful on the quarterly results.
2% to 3% of your portfolio.
Futurecaps recommends 20 to 25 multibaggers per year, we recommend a 25% to 50% allocation of your savings in equity. The stocks recommended here are gone through Analysts of several years experience in stock market. Although they were successful in predicting future multibaggers, the overall stock market is a risky game. So we recommend the reader to put his/her own thoughts & invest wisely.