R Systems International Limited Q4 FY21 Earnings Conference Call Insights

Key highlights from R Systems International Limited (RSYSTEMS) Q4 FY21 Earnings Concall

 Management Update:

• RSYSTEMS commented that the business outlook continues to be positive with a strong demand and the company is further extending its infrastructure in SEZ in line with its sales funnel.

Q&A Highlights:

• Namrita Sarda asked when the company can expect to double the current revenue. Satinder Singh Rekhi MD answered that the company feels 2022 will be a good year. RSYSTEMS’ aim is to double this INR300 million company in the next 2-3 years’ time. If the demand and supply is there, the company believes it can double in next three years.

• Namrita Sarda also asked if the company is seeing serious pressure from European markets due to the current geopolitical situation. Satinder Singh Rekhi MD replied that as of now the company’s European business is doing very well and grown close to 30% last year and it’s pipeline also is very strong.

• Namrita Sarda asked what geographies the company will be focusing next year for the growth. Satinder Singh Rekhi MD said that 70% of the company’s revenue comes from North America, 15% from Europe, about 15% from South East Asia. Therefore, North America and European markets are doing well and RSYSTEMS wants to grow in these markets.

• Sonal Minhas of Prescient Capital asked that with the lockdowns going away if the company is seeing a slowdown or tapering in general of digital adoption. Avirag Jain CTO replied that the demand for digital is going to stay. The company added that demand is not an issue right now.

• Sonal Minhas of Prescient Capital asked about customer retention and repeat order percentage. Avirag Jain CTO answered that the company’s customer retention or repeat order is almost 90% plus. The company loses a customer due to acquisition or it’s due to some financial issue with a customer.

• Sonal Minhas of Prescient Capital asked about any loss of customers. Satinder Singh Rekhi MD said the company hasn’t lost any major customers in last one year. There may be some ramp downs and such, but no major losses.

• Abhay Jain with R Systems asked where does the company see its share price in the near future. Satinder Singh Rekhi MD replied that on the share price the company has no control. RSYSTEMS added that its job is to do performance and will be doing this year as well, is the company’s conviction.

• Abhay Jain with R Systems also asked about the drivers for EBITDA margin growth and if it can be improved further. Satinder Singh Rekhi MD answered that the company’s EBITDA four years ago used to be like 7-8%, today it’s at 14%. Also, the company is quite positive that it can improve it by another 100-200 bps.

• Anubhav Mukherjee of Prescient Capital asked about the attrition rate in the recent quarter and the supply chain situation ahead. Satinder Singh Rekhi MD said the attrition at project manager and above level is very less but the level below that is close to 25% now, which used to be around 14-15% previously. The company is trying to control it through better salaries, incentives and bonuses, which is a challenge the company is working on.