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RSYSTEMS · price
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R Systems International has approved the acquisition of 100% of Novigo Solutions, an Indian IT services firm specialising in low-code/no-code development and intelligent automation. The upfront cash consideration is INR 400 crores, with additional stock consideration linked to future EBITDA performance, implying an upfront EBITDA multiple of around 6x on Novigo's FY25 EBITDA of INR 657 million. Novigo reported FY25 revenue of INR 2,644 million, a 43.8% three-year revenue CAGR, and a 24.9% EBITDA margin, and the deal is expected to be EPS accretive for R Systems from year one. The combined entity will have pro-forma revenue of around INR 20,619 million and EBITDA of INR 3,819 million, strengthening R Systems' Agentic AI capabilities and expanding its Middle East presence plus delivery footprint in Mangalore and Bengaluru. Novigo's management team will continue with the combined platform, and a shareholders' agreement contemplates a potential merger of Novigo into R Systems after the FY27 audit.
This is a growth-and-capability-led acquisition that should be viewed positively by shareholders — it adds scale, high-margin Agentic AI expertise, and Middle East exposure while being EPS accretive from year one. Funding via debt and internal accruals (plus earn-out-style stock consideration) helps limit near-term dilution, though the size of the deal (about 15% of R Systems' LTM revenue) adds integration and execution risk.