Broker’s Call: R Systems (Buy)

Target: ₹300

CMP: ₹248.20

R Systems (RSYS) has evolved its business model to accelerate revenue growth over CY26-28E, supported by completed leadership reinforcement, sales incentives aligned to quality deal wins, disciplined account farming, healthy ACV momentum, a strengthened partner ecosystem, geographic expansion and AI-led offerings.

RSYS’ EBIT margin expanded 640 bps to 15.3 per cent over Q1CY24-Q1CY26, driven by operating leverage, operating efficiency, acquisition-led accretion and currency tailwinds. However, margins are expected to remain under pressure through the remaining quarters of CY26 due to wage revisions, lower utilisation, AI investments and higher subcontractor expenses. We estimate EBIT margin at 14.7% in CY26, stabilising at 14.8% in CY27–28.

The Novigo acquisition comprises an upfront cash consideration of ₹400 crore, with additional stock-based earn-out linked to future EBITDA achievement.

While AI is disrupting the traditional product engineering model by reducing billable hours and compressing SDLC, RSYS has delivered organic revenue growth over the last few years. The company has built proprietary AI studios for SDLC acceleration, and agentic AI workflows, positioning AI as a TAM expander. We raised our target P/E multiple to 13x (from 12x), driven by strong account mining, a healthy cash balance and potential growth pick-up. Accordingly, we maintain our Buy rating with a revised target price of ₹300, based on 13x September 2028E EPS.

Published on July 23, 2026