Ramco Systems Net Income jumped on 209% and EBITDA Margin increased slightly on 1.6 pp from 18.8% to 20.3%
20-05-2016 • About Ramco Systems (
$RAMCOSYS) • By InTwits
Ramco Systems reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Ramco Systems is a fast growth stock: FY2016 revenue growth was 24.2%, 5 year revenue CAGR was 17.0% at FY2016 ROIC 7.6%
- EBITDA Margin is expanding: 20.3% in FY2016 vs. 18.8% in FY2015 vs. 9.6% in FY2012
- EBITDA Margin is quite volatile: 20.3% in FY2016, 18.8% in FY2015, 4.9% in FY2014, -2.8% in FY2013, 9.6% in FY2012
- The company has business model with low profitability: ROIC is 7.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ramco Systems's Revenue surged on 24.2%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.5 pp from 10.4% to 8.8% in FY2016. During FY2012-FY2016 EBITDA Margin bottomed in FY2013 at -2.8% and was growing since that time.
Net Income margin increased on 5.2 pp from 3.5% to 8.7% in FY2016. During FY2012-FY2016 Net Income margin bottomed in FY2013 at -16.9% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 10.3%. The company's CAPEX/Revenue dropped on 11.8 pp from 22.1% in FY2013 to 10.3% in FY2016. It's average level of CAPEX/Revenue for the last three years was 12.7%. To maintain its fast growth Ramco Systems invested a large share of EBITDA (50.5%) to CAPEX.
Return on investment
The company operates at low ROIC (7.6%) and ROE (9.0%). ROIC increased on 3.1 pp from 4.4% to 7.6% in FY2016. ROE increased slightly on 1.9 pp from 7.0% to 9.0% in FY2016. During the last 5 years ROIC bottomed in FY2013 at -10.2% and was growing since that time. During FY2012-FY2016 ROE bottomed in FY2013 at -27.5% and was growing since that time.
Leverage (Debt)
The company paid down all the debt in FY2016. Cash dropped on 32.4%.
Financial and operational results
Ramco Systems ($RAMCOSYS) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 2,230 | 2,393 | 2,631 | 3,605 | 4,477 | 24.2% |
| EBITDA | 215 | -67 | 128 | 676 | 909 | 34.5% |
| Net Income | -89 | -404 | -238 | 127 | 392 | 209.1% |
Balance Sheet
|
|---|
| Cash | 97 | 132 | 116 | 108 | 73 | -32.4% |
| Short Term Debt | 1,985 | 2,853 | 1,825 | 785 | 0 | -100.0% |
| Long Term Debt | 7 | 12 | 1,828 | 2,184 | 0 | -100.0% |
Cash flow
|
|---|
| Capex | | 529 | 403 | 447 | 459 | 2.6% |
Ratios
|
|---|
| Revenue growth | 9.3% | 7.3% | 9.9% | 37.0% | 24.2% | |
| EBITDA growth | -41.4% | -131.2% | -291.7% | 426.4% | 34.5% | |
|
|---|
| EBITDA Margin | 9.6% | -2.8% | 4.9% | 18.8% | 20.3% | 1.6% |
| Net Income Margin | -4.0% | -16.9% | -9.0% | 3.5% | 8.7% | 5.2% |
| CAPEX, % of revenue | | 22.1% | 15.3% | 12.4% | 10.3% | -2.2% |
|
|---|
| ROIC | -1.9% | -10.2% | -5.6% | 4.4% | 7.6% | 3.1% |
| ROE | -5.3% | -27.5% | -20.1% | 7.0% | 9.0% | 1.9% |
| Net Debt/EBITDA | 8.8x | | 27.6x | 4.2x | -0.1x | -4.3x |
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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cyient ($CYIENT) | - | 20.6% | 17.8% | 24.0% | 13.1% |
| Empower India ($EMPOWER) | -3.7% | -13.2% | -32.6% | 23.9% | - |
| Hexaware Technologies ($HEXAWARE) | 34.3% | 17.3% | 13.0% | 21.0% | - |
| Tech Mahindra ($TECHM) | 6.8% | 25.2% | 174.0% | 20.1% | - |
| Mindtree ($MINDTREE) | - | 23.2% | 28.8% | 17.0% | 31.8% |
| |
|---|
| Median (23 companies) | 5.9% | 20.5% | 14.0% | 8.1% | 12.2% |
|---|
| Ramco Systems ($RAMCOSYS) | - | 7.3% | 9.9% | 37.0% | 24.2% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Consultancy Services ($TCS) | - | - | 47.4% | 42.4% | 43.9% |
| Infosys ($INFY) | 41.3% | 98.1% | 35.9% | 38.3% | 37.4% |
| Mindtree ($MINDTREE) | 31.5% | 36.2% | - | 34.8% | 32.4% |
| Wipro ($WIPRO) | 29.2% | 30.4% | 32.0% | 31.6% | 30.4% |
| |
|---|
| Median (4 companies) | 32.7% | 36.2% | 35.9% | 36.6% | 34.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oracle Financial Services Software ($OFSS) | 35.3% | 35.2% | 37.4% | 39.7% | 41.1% |
| Infosys ($INFY) | 31.6% | 27.9% | 26.3% | 27.1% | 27.1% |
| Tata Consultancy Services ($TCS) | 29.5% | 28.6% | 30.7% | 26.1% | 28.2% |
| Wipro ($WIPRO) | 19.1% | 20.9% | 22.4% | 22.3% | 21.1% |
| Mindtree ($MINDTREE) | 15.1% | 19.8% | 20.6% | 20.3% | 17.7% |
| |
|---|
| Median (26 companies) | 15.1% | 17.2% | 18.5% | 12.3% | 13.6% |
|---|
| Ramco Systems ($RAMCOSYS) | 9.6% | -2.8% | 4.9% | 18.8% | 20.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Niit Technologies ($NIITTECH) | 5.9% | 4.6% | 6.1% | 7.9% | 6.0% |
| Financial Technologies (India) ($FINANTECH) | 8.9% | 11.4% | - | 6.5% | 5.4% |
| Mindtree ($MINDTREE) | 2.5% | 4.5% | 5.0% | 5.6% | 3.4% |
| Tech Mahindra ($TECHM) | 5.4% | 2.6% | 5.0% | 5.0% | - |
| Hexaware Technologies ($HEXAWARE) | 3.8% | 1.8% | 2.3% | 4.4% | - |
| |
|---|
| Median (21 companies) | 3.7% | 3.1% | 2.7% | 3.0% | 2.7% |
|---|
| Ramco Systems ($RAMCOSYS) | - | 22.1% | 15.3% | 12.4% | 10.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Consultancy Services ($TCS) | 48.6% | 48.4% | 50.2% | 40.5% | 44.4% |
| Hexaware Technologies ($HEXAWARE) | 33.5% | 39.2% | 34.7% | 35.7% | - |
| Mindtree ($MINDTREE) | 24.9% | 34.6% | 36.2% | 32.0% | 28.9% |
| Sqs India Bfsi ($SQSBFSI) | 12.1% | 27.0% | 29.4% | 30.6% | 39.9% |
| Tech Mahindra ($TECHM) | 15.4% | 20.1% | 43.0% | 29.7% | - |
| |
|---|
| Median (31 companies) | 19.6% | 20.7% | 23.1% | 20.7% | 20.5% |
|---|
| Ramco Systems ($RAMCOSYS) | -1.9% | -10.2% | -5.6% | 4.4% | 7.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 3I Infotech ($3IINFOTECH) | 8.5x | 20.3x | 27.7x | 14.7x | - |
| Agc Networks ($AGCNET) | 0.9x | 10.1x | - | 4.6x | 22.8x |
| Onward Technologies ($ONWARDTEC) | 2.4x | 2.2x | 4.1x | 1.9x | 1.2x |
| Kpit Technologies ($KPIT) | 0.3x | 0.5x | 0.7x | 0.4x | -0.3x |
| Mphasis ($MPHASIS) | -0.1x | 0.2x | - | 0.2x | - |
| |
|---|
| Median (24 companies) | -0.0x | -0.2x | -0.3x | -0.3x | -0.3x |
|---|
| Ramco Systems ($RAMCOSYS) | 8.8x | - | 27.6x | 4.2x | -0.1x |
