RS Software – Will they pay investors too?

I invested in RS Software way back in 2013. Made very good multibagger returns in this stock that time. This is a company which at that time did not disclose the name of its single biggest client. The share of this company grew more than 100 times and almost nobody still knew this company as it is a very secretive company.

After a gap of almost 6-7 years of negative returns, this company is finally turning out a new chapter in its life. It has invested 100-150 Crores of its own money in developing the backbone of new generation Indian payment system Unified Payment Interface (UPI). They have also produced Bharat Bill Payment System (BBPS) and various other popular softwares for Fraud Risk Management etc. Many other countries are now waking up to the huge payment revolution in India and they and their financial institutions want to copy this success in which RS Software can help them. These software implementation tenders can be in millions or billions which only the future can tell.

But one thing I have learnt from past times is that this company generally has a good performance window (fundamentally) of atleast 4-5 years, once it starts growing. If the company can just repeat its current quarter Consolidated EPS of Rs 3 in the coming quarters, then the yearly EPS in future can be easily Rs 12. I am not including extra Rs 2 per share of Depreciation being shown yearly in the P&L which if added will make the EPS Rs 14 as Depreciation is not actual cash going out of business.

If the company grows for the next 4-5 years as its products have finally started gaining traction, then sky is the limit and EPS could be Rs 40-Rs 100 in that long time frame. In good times a fast growing company could easily command a PE of anywhere close to 50 which can make this stock a Mega Multibagger like NPST (EPS*PE). Hence I am a long term investor in this company until and unless I get a serious red flag, on which I can easily sell my entire holding. Hoping for the best for this exciting fast growing company and multibagger returns for myself.

Disclosure: Invested in this company since almost one year for the very long term. Will sell in an instant in case of some serious red flag or the growth slowing. My calculations can be wrong. I am not a SEBI registered advisor. Please take anything I say with a pinch of salt. This is not a buy or sell recommendation. I have contract notes to prove my point.

Amit Goyal