I have Gone Through why Quant MF Might Have Bought ?

Container Jumped to 18400 TEU and on before 14000 TEU company was Roughly Doing Rs 750 Cr -850 Cr Business on 60% Capacity Utilization ,Now Badly Topline Impacted due to Freight Rates Decline ( Last 4 Con call Read and Tired of Hearing This) if Freight Rates Improves whenever and with Increasing Container Topline May Cross Rs 1000 Cr Easily.

Company will have Negligible Debt after Bond turned into Equity by FCCB which will Increase the Profitability As Hardly any Finance cost will impact.

Company Able to Maintain OPM% due to some Booking Slot Advance Strategy (Still Could not Understand, But Example given by A.K Chatiwala about Rs100 -Rs 80 = 20% ) due to Better Service . so able to maintained PAT despite Fall in Topline.

Container Market Expected to Grow at CAGR of 7.5% FY22-27 due to Rising imported Goods, Flourishing E-commerce etc

Used Bond Money To Form Subsidiary in Dubai Lancia LLC To enter into new region will increase incremental share and will help to maintain opm% and in next 2 years Will Increase

Negative Working Capital due to no Credit Business so not working capital required so no impact on cash flow.

If Company double the capacity the cost may increase just 2%-5% of the sales but profit will jump many fold up (Operating Leverage )

Buying Vessel which will handle 600-800 Container and help to discover new Region and Customer.

Lancia subsidiary will start contributing from oct 2024 ( Hope So…Always Delayed)

Looking for Liquid Container operation in near term ( i do not know why ,should focus on 1 thing First)

Expecting 35% Growth in Gross margin once vessel becomes Operational

30000 TEUs will be added in next 2 years for this QIP Rs 300 Cr ( That means Topline Must 3X from Here once done and able to do what they are Planning)

Acquired Transco Logistics 60% will increase the Freight Forwarding Contribution from 10% Of Topline to 20% in near Term

This is what i Believe Quant Might have seen Before Buying if worked stock will 2X-3X in next 18 Months

I have Spent 2 days Reading 2 annual report and 4 Con Calls : I am just Following No Postion Made

Thanks. Then it makes sense.

I think this might help

Understanding Wealth Management Industry

I was looking at R Systems International this week, and decided to put some thoughts together…

• The price to sales and price to earnings multiples seem fair, and there is the potential for a re-rating
• What will drive this re-rating will be a sustained increase in revenue growth, EBITDA margin improvement, more of a shift to ER&D versus traditional IT services, and consistently showcasing client wins in emerging technologies (cloud, data, automation, and AI/GenAI)
• Regarding the AI bit, the collaboration with IIT Delhi, announced in Feb 2024, is a promising sign of things to come
• Management is trying hard to convince investors that the company is more of an ER&D or digital product engineering company
• It’s good to note that the company does not pursue very low-level IT services work like infrastructure support, basic IT support or ERP implementations
• Management keeps emphasizing how the company wants to focus primarily on handling client products, enhancing them, building/rebuilding them, developing and releasing new features, etc., as opposed to low level IT services
• Cost will continue to remain a focus for the company, and it will focus on cost-led value propositions. A clear indicator that the company is operating in a crowded space
• In my view, this company is still more of at IT services company, versus an ER&D player
• It’s good to see how the company has appointed a chief customer officer, who will be responsible for developing deeper ties with existing customers, and also growing channel sales and partnerships
• I like how the company manages its investor relations related communications. For example, in their Q4CY2023 investor presentation, the q-o-q EBITDA bridge and the 8-quarter revenue and EBITDA margin snapshots are helpful
• Additionally, I noticed a slow and steady upward trend in their utilization numbers from around 75% to 79% over the last two years
• This company being a Blackstone portfolio company can really open doors when the sales team tries to pitch to other Blackstone portfolio companies. Would be interesting to see how the company takes advantage of this opportunity
• I wonder whether Blackstone (or another entity) will try to take this company private again. If this company is already vetted by Blackstone, other institutional investors or even an HNI would be ready to pounce.
• If the company consistently demonstrates big client wins in emerging technologies (cloud, data, automation, and AI/GenAI), along with a lowering interest rate environment, the number of interested investors could really increase
• A customer testimonial would be a nice to have to get a better sense of whether/how R Systems stands out from the crowd in the fairly crowded IT services space

Disclosure: Not invested, but tracking. I personally like to invest in companies that have unique capabilities, with limited competition. At this point, in my view, R Systems International is caught in the crowded IT services space

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