Discounted Cash Flow Calculation for BSE:532370 using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
BSE:532370 DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Ramco Systems's share price is below the future cash flow value, and at a moderate discount (> 20%).
Ramco Systems's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Ramco Systems's earnings available for a low price, and how does
this compare to other companies in the same industry?
Ramco Systems's earnings are expected to grow significantly at over 20% yearly.
Ramco Systems's revenue is expected to grow by 19.4% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Ramco Systems's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
1/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Virender Aggarwal has been the Chief Executive Officer of Ramco Systems Ltd. since May 2012. Mr. Aggarwal served as Senior Vice President of Regional Business Unit-India, Middle of Satyam Computer Services Ltd. since April 2004. He served as the President of Emerging Markets at HCL Technologies Ltd. He also served as Senior Vice President of APAC-MEIA territories (Asia Pacific and Africa) at Satyam Computer Services Ltd. since April, 2004. He was responsible for management of business and delivery operations, which include the development centers across China, Australia, Malaysia, Singapore, Middle East and Japan. Prior to joining Satyam, he served as the Head of a large Indian Software and Training Company operating out of Singapore. He has more than 18 years experience, including eight years in general management positions. His other assignments included working for management consultancy firm - AF Ferguson and Co in India and various positions of responsibility in other organizations in the field of IT consulting. He has been a recipient of numerous prestigious industry awards, including the International Management Action Award for 2004 (IMAA), which was conferred on him by SPRING. He was the first Indian National to receive the award in Singapore. He was also instrumental in the acquisition of Knowledge Dynamics, a high-end local Singaporean Business Intelligence competency-focused organization. He has been a Director of Satyam Computer Services Ltd. and APAC-MEIA territories since April 2004. He serves as a Director of Knowledge Dynamics Pte. Ltd. He served as Director of Satyam Computer Services (Shanghai) Co Limited. Mr. Aggarwal has completed his Masters in Management at BITS, Pilani.
Insufficient data for Virender to compare compensation growth.
Insufficient data for Virender to establish whether their remuneration is reasonable compared to companies of similar size in India.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Ramco Systems management team is less than 2 years, this suggests a new team.
Pusapadi Ramasubrahmaneya Raja
Founder & Chairman
R. Ravi Chandran
Chief Financial Officer
Compliance Officer & Company Secretary
P. V. Abinav Raja
Whole Time Director
Chief Executive Officer
Director of Technology
Chief Marketing & Ecosystem Officer
Chief Human Resources Officer
Senior Vice President of ERP
Chief Knowledge Officer
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Ramco Systems board of directors is less than 3 years, this suggests a new board.
Ramco Systems Limited operates as an enterprise software company in India and internationally. The company offers Ramco Aviation Software, an enterprise-wide M&E/MRO software to address the needs of airlines, heli operators, MROs, and business aviation segments; and Ramco VirtualWorks, a software meta model that captures various data required to generate and deliver solutions in various technology platforms, as well as Ramco DecisionWorks for analytics/reporting. It also provides Ramco ERP on Cloud, a suite of products that covers enterprise functions, such as manufacturing; financial, supply chain, human capital, customer relationship, enterprise asset, and project management; process control; analytics; advanced planning and optimization; and connectors. In addition, the company offers Ramco Human Capital Management, a payroll software; and Ramco Logistics Software, a cloud based software that covers the needs of third-party logistics, freight forwarders, and parcel/courier service providers. Ramco Systems Limited was incorporated in 1997 and is headquartered in Chennai, India.
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