RS Software (India), a leading
software solutions provider for electronic payments industry reported its
highest-ever consolidated sales of Rs 104 crore in the second quarter of FY14,
a growth of 25 percent over the same quarter last year. The company's net
profit also jumped by 22 percent to Rs 11.6 crore. However, what needs to be
highlighted is the expansion of operating profit margins by 490 basis points to
21.2 percent from 16.3 percent last year.
“The revenue growth was led by
healthy expansion in businesses from existing as well as new clients,” Raj
Jain, chairman and managing director at RS Software (India) told
moneycontrol.com in an exclusive interview.
Quarterly Review
The company crossed a turnover of Rs
100 crore for the first time in a single quarter. The investments made in its
prime products like Payment Labs, School of Payments and Knowledge Management
System are now beginning to pay off, explains Jain. The revenue growth in
constant currency terms was four percent, quarter-on-quarter (QoQ).
Guidance
RS Software's guidance of 20 to 25
percent growth in operating profits in FY14 over previous year remains
unchanged despite rupee fall. "The third quarter traditionally remains a
weak quarter as two of our key clients have September year ending, so the
spending from these two clients will be on the lower side in December quarter,”
he added.
Industry Outlook
“The evolution is happening in the
electronic payment industry as major central governments across the globe are emphasizing
the need of higher security for electronic payments and fraud management. We
are seeing the momentum picking up in the first half of FY14," said Jain.
"Around 85 percent of the payments in the world are still done via cash
and cheques. In US, around 60 to 65 percent of the payments are done via
electronic while in India the share is just 7 percent. So there is a huge
potential for this industry to grow,” explained Jain.
Operating margins expansion
The fall in rupee coupled with the
cost efficiency measures undertaken by the company led to this massive
improvement in margins of 490 basis points, year-on-year. "There is still
room for improvement as we will install ERP (Enterprise Resource Planning)
program by the end of FY14 which will lead to further cost cutting and margins
expansion,” said Jain.
Patents
The company has not filed for any
new fresh patents after receiving its first patent this year in the Customer
Acquisition space, clarified Jain.
