RS Software expects EBITDA to grow at 20-25% in FY14

Riken Mehta
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RS Software (India)  , a leading software solutions provider for electronic payments industry reported 20 percent jump in its consolidated net profit at Rs 10.19 crore on 17.97 percent growth in net sales at Rs 89.92 crore in this quarter over the previous quarter.

The consolidated operating margins of the company also improved by 275 basis points from 15.12 percent to 17.87 percent.

Quarterly review

“Three components led to boost in sales. Higher investments in sales engine led to incremental sales followed by good performance from RS School of Payments product and innovations in Payment lab helped to clock revenue growth,” Raj Jain, chairman and managing director at RS Software (India) told moneycontrol.com in an exclusive interview.

Guidance

“We are not giving any guidance on the revenue front but we expect operating profits to grow in the range of 20 to 25 percent in FY14. Operating margins may be impacted as the company intends to invest profits in new innovations,” he added.

Capex

“We will continue to invest heavily in our product RS School of Payments, Payment labs and knowledge management depositors this year,” said Jain.

Revival in US economy to benefit

The US economy has revived in the last few quarters and RS Software (India) will benefit significantly from it. Around 90 percent of the company's revenues are generated from US.

Opportunities

“Around 85 percent of the global retail transactions are still done by cash or cheque. So, there is tremendous potential for credit card transactions to grow. Our company will benefit from the increase in credit card transactions going ahead,” Jain added.

Rupee Impact

Jain clarified that the company will gain marginally from the rupee depreciation since the revenues are hedged. The company’s revenue grew by 12 percent in US dollar tems in this quarter.

Investments and Acquisitions 

"The company has invested Rs 33 crore in treasuries and will liquidate it when required to fund the acquisition. We evaluated two companies for acquisition in this quarter but none of them proved to be a strategic fit for the company. We are looking for acquisitions and will use the cash (treasuries) to fund it,” said Raj Jain.

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