Dolat Capital Market has given Accumulate recommendation for Ramco Systems with a target price of Rs. 700 in its research report issued on Feb 05, 2021
Dolat Capital Market’s research report on Ramco Systems
$ Revenue increased by 8.3% QoQ and 12.2% YoY to $23.3mn well above our estimate of $21.9mn. Revenue recognition was better as the new clients accounted for 31% of revenues (v/s) 20% in Q2. Bookings for Q3 were strong at $38.4mn (up 28.9% YoY) V/s 8 Qtr Avg of US$26mn. Strong Booking also adds Revenue Visibility up by ~$13mn, taking total unexecuted Order Book to $177.7mn (2.1x revenue), indicating sustained momentum and improving revenue visibility. Profitability was stable after adjusting for Fx gains at 17.9% (up 16bps QoQ – best ever) despite normalization of cost – employee cist up 9% QoQ, SG&A up 8% QoQ. Expect to sustain 25%+ EBIDTA margin hereon.
We continue to remain confident on improving business prospects (Faster go-lives, improved cost efficiencies and sustained deal momentum – added $86mn in new deals on YTD basis up 12% YoY – 1.34x of its revenues) and have built in revenue/EPS CAGR of 17%/27% over FY21-23E and retain our Accumulate rating on the stock with a DCF-based TP of Rs700 (implies 21x PER on FY23E earnings).