After Avanti Feeds’ spectacular surge of 20%, it is now the turn of RS Software. It surged 15% today and sent its’ investors into ecstasy.
To Dolly Khanna’s fans, the surge would not have come as a surprise. In my last piece, I had already alerted that the confluence of two stock wizards in RS Software, namely, Dolly Khanna and Sunil Singhania, meant that “magic” would happen sooner than later.
On a YOY basis, the stock has given a fabulous return of 257%. The 3 month return is itself an incredible 117%.
The best part is that despite the steep surge, the stock is still quoting at a single digit P/E of 9.
A number of analysts are now waking up to the potential of the stock.
Now, HDFC Securities has joined the fray and put its muscle behind RS Software.
In a succinct research report, Rethish Varma of HDFC Sec has pointed out that the electronic payments industry has immense potential and that RS Software has been able to maintain a long standing relationship with all its clients across geographies.
Rethish explains that the biggest risk to RS Software is its’ client concentration (VISA). However, the management is alive to this risk and is investing more on improving its sales and marketing division in order to win more clients and diversify globally. He also points out that the company has a strong balance sheet with no debt and good cash and equivalents and also a growth focused strong management.
Rethish says that the market price of Rs.376.55 (Rs. 430 today, after the 15% surge), the stock is trading at 7.26x FY16E EPS which is “attractive” considering the immense growth potential and strong fundamentals. He advices investors to buy the stock for sequential targets of Rs.440.5 and Rs.544 (8.5x‐10.5xFY16E EPS).
So, if you still don’t have the stock in your portfolio, you need to read up all the research reports and come to terms with RS Software’s potential.
Meanwhile, a number of other stocks also spread cheer amongst investors.
Dharmesh Kant’s stock pick, MPS, surprised everyone with a jump of 15%. MPS has the backing of stock wizard Ajay Relan of CX Partners. Emkay has also issued an elaborate report explaining why MPS is a great buy.
JB Chem also maintained its momentum with a spurt of 12%. It looks to be on course to touch the target of Rs. 250 promised by Sharekhan and Sunidhi.
Yet another stock that brought cheer was Godavari Power, which hit the upper circuit of 10%. The stock reported block buster Q1FY15 results that thrilled investors. Daljeet Kohli has carried out a masterful analysis of the stock and promised a target of Rs. 198.