Ramco Systems Limited

Technology — Software - Application · NSE

₹574.00−₹17.55 (−2.97%)

DalalBaazaar Score

57 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment, falling profits.

In simple words: Reasonable but unspectacular business quality, though profits are falling even as sales grow. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:48 pm

Understanding the Business

Company site ↗

The 60-second version of Ramco Systems Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Ramco Systems Limited operates as an enterprise software company in the United States, Europe, the Asia-Pacific, India, and the Middle East, and Africa.

IndustrySoftware - Application

SectorTechnology

Employees1,442

Annual revenue₹701 Cr

How does it make money?

Turns over ₹701 Cr a year. Of every ₹100 of sales, about ₹6 reaches shareholders as profit, with ₹24 left at the operating level before interest, tax and depreciation. Each of its 1,442 employees supports ₹48.6 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹48.6 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 11.9% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE32.0%

What is the outlook?

1 analysts covering the stock expect revenue to grow about 11.8% and earnings to grow about 43.2% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+11.8%

Est. earnings growth+43.2%

Analysts1

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +42% while net margin moved -114% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+42%

Margin effect-114%

DalalBaazaar Score

57/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ P/E of 51.9x is demanding — it needs sustained high growth to justify
✗ P/B of 6.13x is a steep premium to book

Quality vs. Valuation

Company Quality

66/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

35/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

51.9x

Sector Median

16.5x

median of 4 sector peers

⚠️Against its sector it trades 213% above the peer median of 16.5x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

16.5x median of 4 peers · +213%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

12.2x

PEG

—

What's Good / What's Bad

🟢 What's Going Well6

Margins are improving
EBITDA margin is up from -26.5% to 24.3% over 3 years.
Debt is being paid down
Total debt is down 60% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on equity is rising
ROE has improved from -38.8% to 12.0%.
Return on capital is rising
ROCE has improved from -33.9% to 11.9%.
Very low debt
Debt/Equity of 0.12x leaves the balance sheet with plenty of headroom.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

No automated checks triggered

None of the automated financial checks below were triggered on the years of data available. That is not the same as a clean bill of health — see what could not be checked.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from -26.5% to 24.3%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 60% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹58 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

A premium to the sector to defend
It trades 213% above the peer median. That premium needs a reason that persists, or it closes.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 9% a year✓ 12.5% CAGR
Latest reported year was 7.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 22%✓ 24.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹58 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 9%✓ 11.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

6 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 5 neutral · 3 weak

Market Cap

₹2,160 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

51.9x

Expensive

Expensive — verify against sector peers

P/B Ratio

6.13x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹11.07

Profitable

Profitable on a per-share basis

ROE

12.0%

Moderate

Moderate capital efficiency

ROCE

11.9%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.12x

Low

Conservative leverage

Revenue Growth (YoY)

7.1%

Modest

Modest growth

Profit Growth (YoY)

-36.0%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹58 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

32.1x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

2.4%

Weak

Thin margins leave little room for error

Net Margin

5.8%

Average

Average bottom-line conversion

Current Ratio

1.03

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.60

Defensive

Steadier than the market

52W Range Position

37%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

565.9 / 579.8

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

47.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹492 Cr	₹526 Cr	₹591 Cr	₹701 Cr	+12.5%
EBITDA	-₹130 Cr	-₹145 Cr	₹86 Cr	₹170 Cr	—
EBITDA Margin	-26.5%	-27.6%	14.6%	24.3%	—
PAT (Net Profit)	-₹207 Cr	-₹242 Cr	-₹34 Cr	₹42 Cr	—
EPS	₹-65.6	₹-68.51	₹-9.35	₹11.15	—
ROE	-38.8%	-77.7%	-10.8%	12.0%	—
ROCE	-33.9%	-58.2%	-5.4%	11.9%	—
Total Debt	₹106 Cr	₹63 Cr	₹54 Cr	₹43 Cr	-26.2%
Free Cash Flow	-₹77 Cr	₹15 Cr	₹33 Cr	₹58 Cr	—

🟢 Revenue has grown at 12.5% a year over 3 years.

🟢 EBITDA has turned positive, from -₹130 Cr to ₹170 Cr.

🟢 EBITDA Margin has risen from -26.5% to 24.3% over 3 years (+50.8 pts).

🟢 PAT (Net Profit) has turned positive, from -₹207 Cr to ₹42 Cr.

🟢 EPS has turned positive, from ₹-65.6 to ₹11.15.

🟢 ROE has risen from -38.8% to 12.0% over 3 years (+50.8 pts).

🟢 ROCE has risen from -33.9% to 11.9% over 3 years (+45.8 pts).

🟢 Total Debt has shrunk at 26.2% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹77 Cr to ₹58 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹745 Cr

Total Liabilities

₹391 Cr

Cash & Equivalents

₹123 Cr

Operating Cash Flow

₹134 Cr

Capex

-₹77 Cr

Shareholding (proxy)

Institutional Holding

6.3%

Insider Holding

63.6%

Analyst Consensus

Recommendations

1 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹700

+22.0% vs CMP

Target Range

₹700 – ₹700

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

1 positive3 mixed2 general

Ramco Systems (NSEI:RAMCOSYS) Stock Forecast & Analyst Predictions

Simply Wall Street, 02 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Ramco Systems Share Price rise and valuation at Rs 598.15

Univest, 14 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Ramco Systems hits 20% upper circuit on strong Q4 results; profit up 372%

Business Standard, 22 MayResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Explained - The two main triggers behind Ramco Systems' 10% lower circuit

CNBC TV18, 24 Jul

TCI Express, Ramco Systems Lead Top Volume Gainers on June 24

HDFC Sky, 24 Jun

Why Is Ramco Systems Share Price Falling Key Reasons 2026

Univest, 24 JunPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health

MiddlingGrowth · Profitability

WeakValuation · Risk

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you.

All 5 tripwires holding · see Key things to watch ↑