R Systems banks on AI-led demand, Novigo deal to lift margins

Noida-based product engineering and digital solutions firm R Systems expects stronger growth momentum in the coming quarters, supported by its acquisition of Novigo, a specialist in low-code and no-code (LCNC) development and intelligent automation

Nitesh Bansal, CEO of R Systems called it a “capability-led acquisition” that strengthens R Systems’ position in the ongoing AI transformation. “By integrating Novigo’s strengths in low-code / no-code, as well as their intelligent automation, we can now take enterprises from AI model engineering to autonomous execution under one roof,” he explained.

While the company delivered steady growth over the past seven quarters, overall momentum had been muted due to market conditions. That trend is now reversing, with large deal wins returning and AI adoption helping R Systems differentiate in the market.

Novigo has achieved 44% compound annual growth rate (CAGR) over the last three years, driven by its strong presence in the Middle East and its end-to-end automation capabilities. Bansal believes the combined strengths of both companies will position R Systems for market-leading growth in the coming quarters.
With Novigo’s 25%+ earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin profile compared to R Systems’ 17.5%, the deal is expected to be accretive to both earnings and margins from day one. The combined entity will have a revenue base of nearly $240 million, with Novigo adding about $30 million to R Systems’ $208 million topline.

Another important leg of the deal is geographic expansion. Novigo generates 47% of its revenues from the Middle East, a region where R Systems previously had no presence. “It’s a $25 billion target spend market… we absolutely will have great synergies in the Middle Eastern Market for the combined entity,” Bansal said. Initially, the Middle East is expected to contribute 2–3% of consolidated revenues, but this could rise to 5–6% over time.

The acquisition is being funded through a mix of internal accruals and debt. Of the ₹400 crore upfront payment, R Systems will use ₹125 crore from internal accruals and raise the balance ₹275 crore via listed NCDs. The company currently has around ₹200 crore cash reserves on its books.

R Systems’ current market capitalisation is ₹5,587 crore. The stock is currently trading at ₹472.50 as of 11:54 am on the NSE and has declined 3% over the last year.

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