🧭 1. At a Glance
R Systems International Ltd (NSE: RSYSTEMS) is a mid-sized IT services company that specializes in product engineering, cloud enablement, digital platforms, and increasingly, GenAI and IoT offerings. Despite muted topline growth recently, it runs with a lean structure, high margins, a 75%+ dividend payout ratio, and a whopping ROE of 21.2%. While most IT stocks get valued on brand hype, R Systems is quietly returning cash and compounding profits.
🎬 2. Intro – Not a Hype Stock. Just a Real One.
Forget TCS, forget HCL.
This one won’t be in your uncle’s largecap MF.
But R Systems?
✅ 20%+ ROE
✅ 15% OPM
✅ Debt-free
✅ 75%+ dividend payout
✅ Stock up 3.5x in 5 years
This Noida-based IT player isn’t chasing headlines—it’s just making money. And with the amalgamation of Velotio and Scaleworx pending, it might just get leaner, meaner, and even more niche-focused.
⚙️ 3. WTF Do They Even Do?
R Systems offers digital transformation services in:
- 💻 Product Engineering & QA Testing
- ☁️ Cloud Migration + Enablement
- 🤖 AI/Analytics Platforms
- 📱 Application Dev + Mobile Engineering
- 🧠 Recently launched OptimaAI (GenAI suite for enterprises)
- 🧩 Released an IoT Smart C2C Connector on AWS
Its clients are global tech and telecom players, healthcare product firms, and fintech customers. About 90%+ of revenue is from exports, especially US and Europe.
📊 4. Financials – Consistent, Predictable, Cash-Rich
| Metric | CY22 | CY23 | TTM (FY25) |
|---|---|---|---|
| Revenue (₹ Cr) | 1,516 | 1,685 | 1,768 |
| EBITDA (₹ Cr) | 200 | 252 | 272 |
| OPM (%) | 13% | 15% | 15% |
| Net Profit (₹ Cr) | 140 | 140 | 142 |
| EPS (₹) | 11.81 | 11.84 | 12.03 |
✅ OPM expanded from 12% → 15% in 2 years
✅ PAT held steady even with weak macro
✅ No surprises, no drama – just smooth compounding
💸 5. Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| P/E | 37x |
| P/B | 8.45x |
| Dividend Yield | 2.81% |
| ROE | 21.2% |
At 37x P/E, it’s no longer a bargain. But still offers better fundamentals than many higher-valued IT peers.
🧮 FV Calculation:
- FY26E PAT: ₹160–170 Cr
- Fair P/E: 28–32x
- FV Market Cap: ₹4,480–₹5,440 Cr
- FV/Share: ₹380–₹460
📉 CMP ₹446 = fully priced based on FY26 earnings
🍿 6. What’s Cooking – News, Triggers, Drama
- 🧬 Merger with Velotio & Scaleworx to simplify group structure
- 🤖 OptimaAI suite launched to tap GenAI wave
- 🔁 IoT Smart Connector on AWS launched Mar 2025
- 🏅 Earned Great Place to Work® 2025–26 certification
- 👋 COO resigned in April 2025—leadership shuffle underway
- 📊 ROE/ROCE staying consistently 20%+
No high-profile MNC tie-ups or Wipro-style big-bang restructuring—just quiet execution.
🏦 7. Balance Sheet – How Much Debt, How Many Dreams?
| Item | FY24 |
|---|---|
| Net Worth | ₹625 Cr |
| Borrowings | ₹73 Cr |
| Fixed Assets | ₹571 Cr |
| Cash & Cash Equiv. | ₹220–250 Cr (est.) |
| Debt/Equity Ratio | ~0.11x |
✅ Net debt-free
✅ Consistent reserves buildup
✅ High dividend payout
✅ Solid cash generation from ops
💵 8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | Capex (₹ Cr) | FCF (₹ Cr est.) |
|---|---|---|---|
| CY22 | ₹96 | ₹8 | ~₹88 |
| CY23 | ₹211 | ₹219 | Slightly negative due to infra build |
| FY25 TTM | ₹235 | ₹14 | Massive FCF rebound |
This is a cash machine. Dividend payout of ₹130+ Cr in CY23 = 90%+ of PAT.
📐 9. Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE (%) | 21.2% |
| ROCE (%) | 20.8% |
| OPM (%) | 15% |
| Dividend Payout (%) | 75.1% |
| Debtor Days | 54 |
| CCC | 54 Days |
✅ Capital-efficient
✅ Working capital-light
✅ ROCE of 20% puts it in elite territory for smallcap IT
💹 10. P&L Breakdown – Show Me the Money
| Quarter | Revenue (₹ Cr) | PAT (₹ Cr) | OPM (%) |
|---|---|---|---|
| Q1FY25 | 432 | 25 | 14% |
| Q2FY25 | 444 | 40 | 15% |
| Q3FY25 | 449 | 39 | 16% |
| Q4FY25 | 442 | 39 | 16% |
Steady quarterly earnings.
Margins back to 16%—among the highest in midcap IT.
Not high-growth, but definitely high-quality.
🧾 11. Peer Comparison – Who Else in the Game?
| Company | P/E | ROE (%) | OPM (%) | PAT (₹ Cr) |
|---|---|---|---|---|
| R Systems | 37.1 | 21.2 | 15% | 142 |
| Cyient | 23.5 | 12.8 | 15.4% | 612 |
| Sagility | 38.8 | 7.3 | 23.3% | 539 |
| Inventurus | 55.8 | 33.0 | 28.9% | 486 |
| LTTS | 36.5 | 22.1 | 17.7% | 1,260 |
R Systems delivers top-tier return metrics, without the sky-high valuation of Affle or Inventurus.
👨💼 12. Misc – Shareholding, Promoters, KMP
| Shareholder | % (Mar 2025) |
|---|---|
| Promoters | 51.90% |
| FIIs | 3.96% |
| DIIs | 8.66% |
| Public | 35.48% |
👨💼 CEO: Mr. Satinder Singh Rekhi
📌 Shareholding stable
📌 Increasing DII interest → smart money watching
📌 Retail base steady at ~35k shareholders
🧑⚖️ 13. EduInvesting Verdict™
R Systems is not here to dazzle you with buzzwords or flashy analyst meets.
It just:
- Builds software for global clients
- Maintains margins of 15%
- Delivers 20%+ ROE
- Pays 75%+ of profits as dividends
- Runs cash-positive, debt-light, and drama-free
📉 The stock is fully priced today.
📈 But if earnings catch up in FY26, it can re-rate further post-merger.
🎯 This is India’s “quiet compounder” in tech.
Don’t chase. But don’t ignore either.
✍️ Written by Prashant | 📅 July 11, 2025
Tags: R Systems, Smallcap IT, Dividend Tech Stock, ROE Compounder, Velotio Merger, Cloud + GenAI, OptimaAI, EduInvesting
