Published: Sep 29, 2021
Price: ₹482
Current Price: ₹ 272 (Sep 23, 2022)
Ramco Systems Ltd (RSL) is a cloud-based technology company with global operations. It provides Enterprise Resource Planning (ERP), HR & Payroll (HRP), Aviation Maintenance and Engineering (M&E), and Maintenance Repair and Overall (MRO) software to customers across the globe.
RSL has 24 offices worldwide and 1900+ employees. RSL is listed among the top 3 payroll vendors globally.
Quick Facts:
What makes Ramco’s HRP Unique:
Payroll is so complex due to country specific ever-changing laws and regulations.
Ramco’s payroll platform is a global platform with local compliance (country-specific). It has single code base for 50+ countries. It provides consolidated global view.
50+ countries native payroll in a single platform.
Only neutral payroll provider with a platform having no conflict with HRP providers.
Partnerships with Workday and Oracle.
Workday and Oracle are happy dealing with Ramco in regions where they don’t have a payroll solution. RSL would like to become one of the leaders in the payroll space working with Workday and Oracle.
AI/ML based cognitive process automation.
Benchmark:
Ramco is among the Top 3 Multi-Country Payroll Solution.
NelsonHall identified Ramco as a Leader for Payroll Services in APAC.
Workday and Oracle are the leaders in the cloud HCM market. Ramco has partnered with Workday and Oracle for its payroll platform.
Revenue:
RSL has delivered a profit growth of 18% CAGR over last 5 years.
– ERP business accounts for 36% of its revenue.
– HRP business accounts for 34% of its revenue.
– Aviation business accounts for 30% of its revenue.
Clients:
RSL has 1000+ customers and enjoys customer diversification with repeat orders from large clients, including industry majors.
Large MNCs with multi-country payroll:
– Accenture Philippines, Adecco, Americana, Coca-Cola, General Electric, Johnson Controls, Schneider Electric, and Standard Chartered.
– 8 of the top 10 helicopter companies in USA run on Ramco.
– 4 out of the 4 adversary air defence operators trust Ramco.
– 2 of the top 5 MROs trust Ramco.
– 2 of the top 5 aircraft manufactures trust Ramco.
– World’s top two crane rental companies use Ramco for Fleet Management.
Competition:
RSL faces stiff competition from large established players such as SAP, Oracle, Microsoft, Netsuite, and Plex Systems. This puts pressure on its margins.
Management:
RSL is part of the Ramco Group.
Investors:
– Promoter holds 54.45% of the company
– MFs hold 8.98% of the company
– Vijay Kedia holds 1.81% of the company
Vijay Kedia increased his holdings to 2.56% from 1.81% in the Sep 2021 quarter.
Opportunity:
The global payroll services market is close to $24 billion and is growing at a steady pace. RSL has tied up with Workday and Oracle for its payroll platform. That opens up opportunity for the customer base that these companies enjoy. RSL has also partnered with Big 4 consulting firms.
Ramco has a total pipeline of $500 million (Aviation: $150 million, HRP: $250 million, ERP: $100 million). It has 15 deals over $5 million (out of which 8 are in aviation and 7 are in HRP). It has 4 deals over $10 million. RSL has $50 million pipeline with Oracle and $20 million pipeline with Workday.
Valuation:
The current market price is ₹482 (as on Sep 29, 2021). Price to Sales multiple is 2.4x compared to other cloud businesses which trade at 5-10x.
Resources:
Annual Reports, Investor Presentations
Gartner, Nelson Hall
Disclaimer:
For educational purposes only.
MY VΛLUΞ PICKS 