Ramco Systems reports 426% EBITDA growth and 13.9 pp EBITDA Margin growth from 4.9% to 18.8%
20-04-2015 • About Ramco Systems (
$RAMCOSYS) • By InTwits
Ramco Systems reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 18.8% in FY2015, 4.9% in FY2014, -2.8% in FY2013, 9.6% in FY2012, 18.0% in FY2011
- The company has potentially unprofitable business model: ROIC is at 4.4%
- It operates with high leverage: Net Debt/EBITDA is 4.2x while industry average is 1.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Ramco Systems ($RAMCOSYS) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,041 | 2,230 | 2,393 | 2,631 | 3,605 | 37.0% |
| EBITDA | 367 | 215 | -67 | 128 | 676 | 426.4% |
| Net Income | 23 | -89 | -404 | -238 | 127 | |
Balance Sheet
|
|---|
| Cash | 78 | 97 | 132 | 116 | 108 | -6.9% |
| Short Term Debt | 1,550 | 1,985 | 2,853 | 1,825 | 785 | -57.0% |
| Long Term Debt | 7 | 7 | 12 | 1,828 | 2,184 | 19.5% |
Cash flow
|
|---|
| Capex | 335 | | 529 | 403 | 447 | 11.1% |
Ratios
|
|---|
| Revenue growth | -52.3% | 9.3% | 7.3% | 9.9% | 37.0% | |
| EBITDA growth | 20.8% | -41.4% | -131.2% | -291.7% | 426.4% | |
| EBITDA Margin | 18.0% | 9.6% | -2.8% | 4.9% | 18.8% | 13.9% |
| Net Income Margin | 1.1% | -4.0% | -16.9% | -9.0% | 3.5% | 12.5% |
| CAPEX, % of revenue | 16.4% | | 22.1% | 15.3% | 12.4% | -2.9% |
| ROIC | 3.8% | -1.9% | -10.2% | -5.6% | 4.4% | 10.0% |
| ROE | 1.4% | -5.3% | -27.5% | -20.1% | 7.0% | 27.1% |
| Net Debt/EBITDA | 4.0x | 8.8x | | 27.6x | 4.2x | -23.3x |
Revenue and profitability
Ramco Systems's Revenue jumped on 37.0% in FY2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 13.9 pp from 4.9% to 18.8% in FY2015.
Net Income marign jumped on 12.5 pp from -9.0% to 3.5% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 12.4%. CAPEX/Revenue jumped12.4 pp from in FY2012 to 12.4% in FY2015. Average CAPEX/Revenue for the last three years was 16.6%.The company invested a big chunk of EBITDA (66.2%) to CAPEX to secure its growth.
Return on investment
The company operates at low ROIC (4.41%) and ROE (7.03%). ROIC increased on 10.0 pp from -5.6% to 4.4% in FY2015. ROE surged on 27.1 pp from -20.1% to 7.0% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.2x and Debt / EBITDA is 4.4x. Net Debt / EBITDA dropped on 23.3x from 27.6x to 4.2x in FY2015. Debt dropped on 18.7% in FY2015 while cash decreased on 6.9% in FY2015.
Appendix 1: Peers in IT Consulting & Software
Below we provide Ramco Systems benchmarking against other companies in IT Consulting & Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tech Mahindra ($TECHM) | -85.8% | 6.8% | 25.2% | 174.0% | |
| Tata Consultancy Services ($TCS) | | 31.0% | 28.8% | 29.9% | 15.7% |
| Mindtree ($MINDTREE) | | 26.6% | 23.2% | 28.8% | 17.0% |
| Infinite Computer Solutions (India) ($INFINITE) | -57.9% | 19.5% | 31.7% | 24.6% | |
| Infosys ($INFY) | 20.9% | 22.7% | 19.6% | 24.2% | |
| |
|---|
| Median (21 companies) | -42.9% | 22.9% | 20.6% | 14.3% | 15.7% |
|---|
| Ramco Systems ($RAMCOSYS) | | 9.3% | 7.3% | 9.9% | 37.0% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Consultancy Services ($TCS) | | | | 47.4% | 42.4% |
| Infosys ($INFY) | 45.3% | 41.3% | 98.1% | 35.9% | |
| Wipro ($WIPRO) | 31.5% | 29.2% | 30.4% | 32.0% | |
| |
|---|
| Median (3 companies) | 34.7% | 32.7% | 36.2% | 35.9% | 38.6% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Oracle Financial Services Software ($OFSS) | 37.4% | 35.3% | 35.2% | 37.4% | |
| Tata Consultancy Services ($TCS) | 29.9% | 29.5% | 28.6% | 30.7% | 26.1% |
| Infosys ($INFY) | 32.5% | 31.6% | 27.9% | 26.3% | |
| Wipro ($WIPRO) | 21.1% | 19.1% | 20.9% | 22.4% | |
| Tech Mahindra ($TECHM) | 19.5% | 16.7% | 20.7% | 22.2% | |
| |
|---|
| Median (18 companies) | 18.0% | 15.1% | 17.8% | 18.5% | 20.3% |
|---|
| Ramco Systems ($RAMCOSYS) | 18.0% | 9.6% | -2.8% | 4.9% | 18.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Niit Technologies ($NIITTECH) | 4.1% | 5.9% | 4.6% | 6.1% | |
| Infosys ($INFY) | 4.7% | 4.9% | 5.2% | 5.5% | |
| Mindtree ($MINDTREE) | 5.6% | 2.5% | 4.5% | 5.0% | 5.6% |
| Tech Mahindra ($TECHM) | 3.0% | 5.4% | 2.6% | 5.0% | |
| Geometric ($GEOMETRIC) | 3.8% | 3.5% | 4.2% | 4.0% | |
| |
|---|
| Median (17 companies) | 4.0% | 3.8% | 3.2% | 2.6% | 3.2% |
|---|
| Ramco Systems ($RAMCOSYS) | 16.4% | | 22.1% | 15.3% | 12.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Consultancy Services ($TCS) | 47.1% | 48.6% | 48.4% | 50.2% | 40.5% |
| Tech Mahindra ($TECHM) | 19.2% | 15.4% | 20.1% | 43.0% | |
| Geometric ($GEOMETRIC) | 19.6% | 29.9% | 46.4% | 41.1% | |
| Mindtree ($MINDTREE) | 14.9% | 24.9% | 34.6% | 36.2% | 32.0% |
| Cmc ($CMC) | 31.5% | 26.2% | 33.2% | 35.3% | 26.0% |
| |
|---|
| Median (30 companies) | 19.2% | 19.6% | 21.4% | 23.2% | 32.0% |
|---|
| Ramco Systems ($RAMCOSYS) | 3.8% | -1.9% | -10.2% | -5.6% | 4.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| 3I Infotech ($3IINFOTECH) | 3.5x | 8.5x | 20.3x | 27.7x | |
| Starcom Information Technology ($STARCOM) | | | | 17.4x | |
| Onward Technologies ($ONWARDTEC) | 2.7x | 2.4x | 2.2x | 4.1x | |
| Kpit Technologies ($KPIT) | -0.7x | 0.3x | 0.5x | 0.7x | |
| Tera Software ($TERASOFT) | 0.7x | 1.7x | 1.5x | 0.0x | |
| |
|---|
| Median (23 companies) | -0.2x | -0.1x | -0.2x | -0.3x | -0.5x |
|---|
| Ramco Systems ($RAMCOSYS) | 4.0x | 8.8x | | 27.6x | 4.2x |
