Dolat Capital: Ramco Systems’ Deal Wins Momentum Intact Remotely; Tight Cost Initiatives Revives Operating Profit Margin
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Dolat Capital Report
Ramco Systems Ltd. reported strong results with revenue growth of 4.5% QoQ at $19.4 million as against our estimate of $16.5 million as deal signings normalises in Q1 along with continued improvement on faster Go-lives.
Company won new orders worth $21.3 million in Q1 FY21, taking the unexecuted order book to $164 million (2 times revenue).
Order intake improved materially after a brief freeze in March 2020 (signed $13 million in Q4); although sales continue to remain largely digital-led only.
Profitability improved in Q1 significantly with Ebit margins (excluding foreign exchange) at 14.9% as it saved materially on personnel cost (steep pay-cuts to top 90 employees) and selling, general and administrative expense (especially on travel and marketing). We do not see this as sustainable and should normalise to 12% for the full year.
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