Fundamental Analysis Of DRC Systems India – Future Plans, Financials & More
Fundamental Analysis Of DRC Systems India: Information technology has evolved, allowing humans to work more efficiently. The use of technology across industries has helped companies maintain their quality standards by keeping costs low and increasing customer satisfaction. Technology evolution is an ever-growing sector, and Artificial Intelligence has recently taken center stage in automating repetitive tasks. […] The post Fundamental Analysis Of DRC Systems India – Future Plans, Financials & More appeared first on Trade Brains.
Fundamental Analysis Of DRC Systems India: Information technology has evolved, allowing humans to work more efficiently. The use of technology across industries has helped companies maintain their quality standards by keeping costs low and increasing customer satisfaction.
Technology evolution is an ever-growing sector, and Artificial Intelligence has recently taken center stage in automating repetitive tasks. In this article, we will look at DRC Systems India, which operates in the IT sector.
Fundamental Analysis Of DRC Systems India – Company Overview
DRC Systems started in 2012. It has over 300 people and offices located across three locations. The headquarters are in GIFT City, Gandhinagar. The company provides a wide range of IT solutions, including digital marketing services, AI and automation, website development, cloud-based services, enterprise solutions, mobile app development, and others.
DRC Systems serves clients from various industries by leveraging technology with its partners rather than providing one-time solutions. Clients include IIMB, the University of Hyderabad, enterprises such as Happiest Minds, Wipro, GMR Airports, and others, government agencies, international brands, industry leaders, and start-ups.
De-merger:
DRC Systems was spun off from the publicly traded firm Infibeam Avenues in 2020, following the permission of NCLT. Another company, Suvidhaa Infoserve, was demerged alongside DRC to unlock value from Infibeam. DRC systems issued and allotted one share of DRC for every 412 shares of Infibeam Avenues.
Acquisitions:
In December 2022, DRC Systems acquired a 23.34% stake in Nextenders and became an associate of the company. However, in March 2023, the company divested its 5% stake in Nextenders and ceased to be an associate. Finally, in July 2023, the company acquired the entire shareholding of DRC Systems USA LLC, making it a wholly-owned subsidiary.
Segment Analysis:
DRC Systems’ revenue from operations in FY23 is recognized under a single segment: software development, maintenance, and other ancillary services. In FY23, their revenues across geographies were 50.71% domestic, up 26.13% YoY, and 49.28% overseas, up 37.30% YoY.
Industry Overview:
The world is witnessing the technological change, and India is poised to grow, with the IT sector contributing approximately 10% of total GDP by 2025, and India’s technology industry potentially increasing its income to $500 billion by 2030. According to research by the Ministry of Electronics and Information Technology, India is predicted to have 60-65 million jobs requiring digital skills by 2025-26.
India’s digital economy is expected to grow to $1 trillion by 2025. These growth factors are critical for businesses to understand and capitalize on competition, resulting in cost-effective and higher-quality products for customers. Now we have come across the company overview of Fundamental Analysis Of DRC Systems India.
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Fundamental Analysis Of DRC Systems India – Financials
Disclaimer: Consolidated figures are available for FY23, and standalone figures are available for FY20, FY21 and FY22.
Revenue and Net Profit:
Revenue from the company’s operations for FY23 stood at Rs. 21.81 crore as compared to Rs. 19.50 crore in FY22, an increase of 11.84%. Net profit stood at Rs. 4.20 crore in FY23 as compared to Rs. 0.70 crore in FY22, an increase of 500%. Other income increased by 1,177.60% YoY to Rs. 4.22 crore, owing to a fair value gain on an investment.
Consolidated revenue from operations and net profit stood at Rs. 25.62 crore and Rs. 6.69 crore in FY23, respectively.
| Particulars/ Financial Year | Revenue (Cr.) | Net Profit (Cr.) |
|---|---|---|
| 2022-23 | ₹21.81 | ₹4.20 |
| 2021-22 | ₹19.50 | ₹0.70 |
| 2020-21 | ₹20.59 | -₹0.47 |
| 2019-20 | ₹10.86 | ₹0.01 |
Profit Margins:
In FY23, DRC Systems OPM was 34.70%, up from 20.60% in FY22. NPM in FY23 stood at 22.42% and 3.55% in FY22. Both metrics show an increase in margins. However, the rise in NPM can be attributed to an increase in other income. Further years are required to understand the margin expansion.
On a consolidated basis, OPM and NPM In FY23 stood at 33.78% and 26.10%, respectively.
| Particulars/ Financial Year | OPM (%) | NPM (%) |
|---|---|---|
| 2022-23 | 34.70% | 22.42% |
| 2021-22 | 20.60% | 3.55% |
| 2020-21 | 15.00% | -2.30% |
| 2019-20 | 29.00% | 0.10% |
Return Margins:
The DRC Systems RoE increased to 25.60% in FY23, up from 18.88% in FY22. RoCE improved to an impressive 24.46% in FY23, up from 5.58% in FY22. The increase is attributed to a rise in profitability. A RoE of more than 20% is considered respectable in any industry.
The consolidated RoE and RoCE in FY23 stood at 32.59% and 30.19% respectively.
| Particulars/ Financial Year | RoE (%) | RoCE (%) |
|---|---|---|
| 2022-23 | 25.60% | 24.46% |
| 2021-22 | 18.88% | 5.58% |
| 2020-21 | -11.80% | 0.00% |
| 2019-20 | 0.47% | 6.24% |
Debt Analysis:
DRC Systems’ debt to equity in FY23 was nil and in FY22 was 2.23. Interest coverage in FY23 stood at 9.98 times as compared to 16.13 times in FY22. The company has no debt, and the interest coverage ratio slightly decreased in FY23 due to an increase in interest costs to Rs. 0.62 crore from 0.07 crore. However, an interest coverage ratio of more than 1.5 times is considered comfortable.
In FY23, the company’s consolidated D/E ratio was 0.37, with interest coverage of 13.73 times.
| Particulars/ Financial Year | D/E | Interest Coverage |
|---|---|---|
| 2022-23 | 0 | 9.98 |
| 2021-22 | 2.23 | 16.13 |
| 2020-21 | 0 | -9.17 |
| 2019-20 | 0 | 1.55 |
Fundamental Analysis Of DRC Systems India – Key Metrics
List of some of the key metrics of DRC Systems
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹20.10 | Market Cap (Cr.) | ₹227.49 |
| Stock P/E (TTM) | 73.60 | EPS (TTM) | ₹2.01 |
| RoE (%) (TTM) | 13.53% | RoCE (%) (TTM) | 17.82% |
| Promoter Holdings (%) | 22.57% | FII Holdings (%) | 1.03% |
| Debt to Equity Ratio | 0.39 | Interest Coverage Ratio | 9.98 |
| Current Ratio (TTM) | 2.22 | Net Profit Margin (%) | 16.13% |
Fundamental Analysis Of DRC Systems India – Future Plans
- DRC Systems’ wholly owned subsidiary, EMEA-LLC FZ, enters into a Joint Venture agreement with EZMS LLC FZ, a company based in the UAE, to form a Joint Venture company. With a 50% stake, they aim to work with government institutions and corporations in the UAE.
- As part of its long-term growth strategy, the company intends to broaden its product and solution offerings in areas such as artificial intelligence, machine learning, and blockchain technology.
- DRC intends to expand its presence by participating in several brand awareness programs to meet global business demand.
- They anticipate that demand from both local and international businesses will remain steady in the coming years.
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Conclusion
In conclusion, we looked at the Fundamental Analysis Of DRC Systems India, which is in the IT sector. DRC Systems in recent years has demerged from Infibeam avenues. The company is in a growth phase. DRC has been improving its financials and upcoming years are required to further understand its growth.
What do you think about the company? Let us know in the comments section below.
Written by Santhosh
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The post Fundamental Analysis Of DRC Systems India – Future Plans, Financials & More appeared first on Trade Brains.
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