R Systems International - Leveraging The Blackstone Channel For Growth: Systematix

Systematix Research Report

R Systems International Ltd. has evolved into a prominent player in the Product Engineering space, with capabilities in cloud, data, and AI. Management expects global outsourced engineering services spend to touch $450-500 billion in CY25E at 11% compound annual growth rate over CY20-25E.

The company operates in three out of four sub-segments of this market (higher-than-industry growth). These include, digital engineering, software product engineering and embedded engineering. These 3 sub-segments are projected to expand at 22%, 16% and 19%, respectively, over CY20-25E, and R Systems International is aptly placed to gain in this scenario, as per management.

With Blackstone Group as its new promoters, R Systems International is looking to venture into organic and inorganic expansions under the guidance of its new CEO, Mr. Nitesh Bansal, who has spent 23 years at Infosys (as head of global product engineering division).

The company ended CY23 with $200 million revenue and 14.7% Ebitda. R Systems International expects margins to improve to high 15s or early 16s, aided by pyramid rationalisation and operating efficiency.

We do not have a rating on the stock, which currently trades at 42 times one-year forward multiple (consensus estimates for CY24 and CY25 EPS).

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