Hello Sir,

Hope you are doing well.

Everyone is looking for good investment opportunities that can turn out to be multibaggers.

I was recently looking at Ramco Systems. The company develops software solutions for areas like Payroll, Aviation sector, etc.

 

Before that: As on 24th Oct’24, 23 medium/long term stock recommendations are under coverage. Out of the same, 9 are both Positive rated and in the buy zone.

Recently, we also released a new report on Strong growth Chemical Stock available at < 1 time book value. You can get these 23 recommendations including the new one by signing up HERE

 

Coming back to Ramco Systems, the company recently incurred losses in FY 22 to FY 24. The management is trying to turnaround the business and since the past 2 quarters the EBITDA has turned positive. Sometime back, the company also did preferential allotment to Promoters and some institutions at 274.

Below, we have shared our notes from the Q4 FY 24 con-call of the company to understand the outlook for the business.

 

Ramco Systems – Notes from Q4 FY 24 concall

– Introduction

  • Ramco Systems reported a revenue of $63.92 million for FY 23-24, with global consolidated income totaling $64.41 million, approximately INR 529.9 crores
  • Despite challenges and headwinds, recurring revenue grew robustly at 13% year-over-year, compared to 5% the previous year.
  • The company’s unexecuted order book stands at a healthy USD 188 million, positioning us well for the next fiscal year
  • Cloud-based orders, particularly from subscription-driven SaaS solutions, continue to grow, contributing 60% of revenue from SaaS customers, a significant part of our recurring revenue stream
  • Of the total revenue of INR 526 crores, INR 320 crores is recurring
  • Over the past few quarters, we have focused on returning to EBITDA positivity and improving the bottom line consistently
  • Cost reduction efforts have played a key role in reaching EBITDA positive
  • A key area of improvement in our turnaround strategy has been tightening our contractual clauses, ensuring more robust agreements
  • This year, we secured 11 deals valued at over $1 million, including the Korean Air deal, a major milestone for the company

– Ramco Payce

  • A major highlight this quarter was the successful launch of Ramco Payce, a modern SaaS-based platform. It has gained traction and shows promise across multiple markets
  • Given our focus on mid to large-scale enterprises, these engagements typically take 2-3 quarters to transition from demonstrations to orders and revenue

– Korean Air

  • We secured a record multimillion-dollar deal with Korean Air, marking one of the largest deals in Ramco Systems’ history
  • This strategic partnership will drive the tech transformation of Korean Air’s new engine maintenance facility, which will be Asia’s largest engine MRO (Maintenance, Repair, and Overhaul) facility
  • The Korean Air deal alone is valued at over $10 million

– Partnerships and Alliances

  • This year saw the onboarding of Deloitte and BDO as strategic partners, helping to redefine the payroll landscape. We are working closely with them to penetrate new markets
  • These partnerships are essential to expanding our market reach without significantly increasing our sales and marketing efforts. We anticipate this momentum will carry into Q3 of this year
  • Our partnership model is straightforward: our partners, like Deloitte and BDO, provide services to their end customers. In cases where we lack a direct presence, they handle service delivery

– Focus Areas

  • Payroll continues to be a primary focus, representing a large and horizontally diverse market
  • Aviation, specifically in the helicopter and MRO segments, also remains a key area. Our solutions in these niches have strong potential for rollout in new markets, particularly where we already have traction with helicopter-related operations

– Guidance

  • As we continue our turnaround journey, we expect it will take another 12 to 18 months before accelerated growth can be realized
  • Our current focus remains on maintaining EBITDA positivity and managing cash flow to ensure the company remains profitable moving forward

 

(End)

 

Disclaimer: This is not a recommendation to buy/sell any of the stocks mentioned above. The securities quoted are for illustration only and are not recommendatory.

 

Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/

 

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