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R Systems – Multibagger Analysis

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.

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Website: http://www.rsystems.com/

CMP: 53

Screener: http://www.screener.in/company/532735

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash FlowYes.image
Durable Competitive Advantage Okay.  Company is not a big player; No niche segment share.image
Future Growth DriversGood.  For next 2-3 years IT should provide good growth.image
Conservative Debt (long term debt < 3 Net Profit)Yes.  100 crore is current liabilities, net profit 69.image
Debt Equity RatioGood at 0.image
Return on Equity must be Above Average25%. Impressiveimage
Low CAPEX required to maintain current operationsGood.image
Management is holding / buying the stockFlat. Indian Promoters increasing stake, Foreign Promoters selling few in past 2-3 years.image
Price is Under Valued (< intrinsic value)Yes.image
Stock Price is consolidating (now)Yes.image
Stock Price is growing in past years along with EPS growthOkay.image

 

Additional Futurecaps Checklist

PE, PB RatioConsolidated PE: 9 (good); Standalone PE: 17; PB 2.5 (little high)image
Cash Flow Positive, Net Profit % greater than 8%Yes.  NP% around 20% of Sales.image
Paying Dividends, TaxYes.image
EPS Growth Rate30% to 100% in past 1-2 years.image
Jump in Trailing EPSYes. 30%image
Jump in Quarterly EPSYes.image
Expected Gain in 10 Years10-12X in 5 years considering 30% as average EPS  growth & PE resizing in 5 years to 20 (IT standard) – If current growth level is maintained.image
Volume Analysis41 thousand. Good to catch fire.image
Power of BrandCompany is building around product brands.image
Corporate Governance, Reputation of LeadersGood.image
Fraud reportedNot in current serach.image

Declaration

Considering the historical growth & on the grounds of value-analysis Futurecaps declares R Systems as a Multibagger.  Be watchful on the quarterly results.

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Allocation

2% to 3% of your portfolio.

Disclaimer

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.

About Futurecaps

Futurecaps is a 12+ year experienced Indian Stock Market Advisory with SEBI Registration.

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5 Replies to “R Systems – Multibagger Analysis”

  1. I feel promoter (indian/ foreign) are quietly selling small small quantity. Same thing happened last week also.
    This is dubious stock. Hence Mr. Market man is being cautious on this.

  2. Sir, I copied the following values I copied it from moneyworksforme site.
    P/BV 3.43 2.67
    PE 14.04

    So PE of 14 for this stock looks fully priced and less scope to PE expand.you had mentioned that PE of 5, Could you please elaborate on this?. is it based based PE estimated for Fy15?.

    1. Hello Selva,

      Further cross-checking with google-finance & R Systems web site, it seems like the PE is still around 10. Please verify.

      http://www.rsystems.com/investors/financialdata2013/R_Systems_International_Limited_Annual_Report_2013.pdf

      https://www.google.com/finance?q=NSE%3ARSYSTEMS&ei=dCz_U8HeH8SerAH_sIGIBQ

      Plus in moneyworks4me.com there are Standalone & Consolidated PE. I think that makes the difference. We should take Consolidated one.

      Regards,
      Adviser

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