By Chaitanya
BBA Finance Graduate & 6+ Years of Experience in Stock market & Finance

In a significant development for India’s thriving technology sector, R Systems International Limited, a global leader in digital product engineering, has announced its agreement to acquire 100% equity of Novigo Solutions. This strategic move, which has been in the works and is expected to officially close in the coming weeks, as reported on August 21, 2025, marks a pivotal moment for R Systems, substantially enhancing its capabilities in artificial intelligence (AI), automation, and low-code/no-code (LCNC) development. This acquisition is poised to create a formidable entity in the digital transformation landscape, poised for accelerated growth and innovation.

A Strategic Leap into the Future of Digital Transformation

The acquisition of Novigo Solutions by R Systems International is more than just a merger of companies; it’s a strategic alignment of complementary strengths aimed at dominating the evolving digital product engineering space. The deal involves an upfront cash consideration of up to ₹400 crore (₹4 billion), with additional stock consideration tied to Novigo’s future EBITDA performance. While the upfront cash commitment is substantial, sources close to the deal suggest the total transaction value, including the stock consideration, could be around ₹950 crore(Assumption). This investment underscores R Systems’ commitment to expanding its footprint and capabilities in high-growth areas.

Novigo Solutions brings to the table a strong specialisation in low-code/no-code development and intelligent automation services. Their impressive client portfolio spans across critical sectors such as BFSI (Banking, Financial Services, and Insurance), hi-tech, and manufacturing. Novigo has demonstrated remarkable financial performance, recording a revenue of ₹264 crore for the financial year 2024-25 and maintaining a robust EBITDA margin of 25%. What’s even more impressive is Novigo’s consistent growth, showcased by a 44% Compound Annual Growth Rate (CAGR) in revenue over the last three years. With a dedicated workforce of approximately 1,000 employees, primarily based in Mangaluru, Novigo is a well-established player known for its agile and efficient solutions.

Here is a summary of the key financial and acquisition data:

This acquisition is set to expand R Systems’ geographical reach, especially with Novigo’s significant presence in the Middle East, along with its offices in Bangalore and other Tier 2 cities in India. This broadened presence is crucial for tapping into new markets and talent pools. The synergy between R Systems’ existing OptimaAI Suite and Novigo’s expertise in UiPath Diamond-tier automation practice and Microsoft Copilot Centre of Excellence is expected to unlock advanced AI capabilities, offering clients more comprehensive and cutting-edge solutions. This integration is a testament to the forward-thinking approach of both entities, aiming to deliver unparalleled value to their customers globally.

Financial Synergies and a Stronger Combined Entity

The financial implications of this acquisition are overwhelmingly positive for R Systems. The combined entity is projected to achieve an annual revenue of approximately ₹2,060 crore and an EBITDA of ₹380 crore. This significant scale provides a strong foundation for future growth and profitability. The deal is expected to be EPS (Earnings Per Share) accretive from the very first year, meaning it will immediately contribute positively to R Systems’ earnings per share, which is a major confidence booster for investors. Furthermore, the acquisition is anticipated to generate significant revenue and cost synergies, leading to improved operational efficiency and enhanced profitability in the long run.

To support this expansion and ongoing growth initiatives, R Systems has also taken steps to bolster its financial resources. The company recently approved a private placement of non-convertible debentures worth ₹275 crore. This capital infusion will provide the necessary financial muscle to integrate Novigo effectively and pursue further strategic growth opportunities.

Let’s take a closer look at the key financial parameters of Novigo Solutions and the post-acquisition R Systems International:

R Systems has also been demonstrating robust financial health on its own. As per company reports released on August 14, 2025, R Systems’ Q1 FY 2025-26 results showcased impressive growth. The company reported a total income of ₹508.98 crore, marking a significant increase of 21.4% quarter-on-quarter and 16.7% year-on-year. Profit Before Tax (PBT) soared to ₹99.18 crore, an astonishing 172.6% increase QoQ and 111.8% YoY. Similarly, Profit After Tax (PAT) reached ₹75.85 crore, reflecting a massive 175.9% QoQ and 204.9% YoY growth. The Earnings Per Share (EPS) for Q1 FY26 stood at ₹6.10, with ₹6.41 reported for the June 2025 quarter. Furthermore, the company declared a dividend per share (DPS) of ₹12.50, maintaining a high payout ratio of 99.55%. These strong quarterly results provide a solid financial backdrop for the integration of Novigo Solutions.

R Systems’ Proven Track Record of Strategic Acquisitions

The acquisition of Novigo Solutions isn’t an isolated event but rather a continuation of R Systems’ proactive strategy to strengthen its product engineering and AI capabilities through strategic acquisitions. In 2021, the company acquired Robosoft, a move that significantly bolstered its digital product design and engineering expertise. This was followed by the acquisition of Niveus in 2024, further expanding its cloud and data engineering services. These successive acquisitions demonstrate R Systems’ clear vision to build a comprehensive suite of advanced digital solutions, positioning itself as a one-stop shop for complex technological needs.

The founders of Novigo Solutions, Praveen Kumar Kalbhavi, Mohammed Hanif, Mohammed Jarood, and Shihab Kalandar, have built a remarkable company with a strong foundation in intelligent automation and LCNC. Their expertise and the talent of their ~1,000 employees will be invaluable assets to the larger R Systems family.

Outlook: Paving the Way for Future Success

The successful integration of Novigo Solutions is expected to consolidate R Systems International’s position as a powerhouse in AI-driven product engineering and automation solutions. With a combined revenue exceeding ₹2,000 crore and a strong financial outlook, R Systems is well-placed to capitalise on the rapidly expanding global demand for digital transformation services. This strategic R Systems Novigo deal not only broadens the company’s service offerings and geographic reach but also reinforces its commitment to innovation and delivering high-value solutions to its clients worldwide. As the digital economy continues to evolve, R Systems is clearly setting itself up for sustained growth and leadership in the years to come.

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