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Accumulate Ramco Systems; target of Rs 700: Dolat Capital Market

Dolat Capital Market recommended accumulate rating on Ramco Systems with a target price of Rs 700 in its research report dated February 05, 2021.

February 12, 2021 / 04:57 PM IST
 
 
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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.


Outlook

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).

For all recommendations report, click here

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Broker Research
first published: Feb 12, 2021 04:57 pm

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