Ramco Systems Limited (NSE:RAMCOSYS) Released Earnings Last Week And Analysts Lifted Their Price Target To ₹500

A week ago, Ramco Systems Limited (NSE:RAMCOSYS) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 3.4% better than analyst forecasts at ₹1.4b. Higher revenues also resulted in substantially lower statutory losses which, at ₹2.70 per share, were 3.4% smaller than the analyst expected. The analyst typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

Check out our latest analysis for Ramco Systems

Following the latest results, Ramco Systems' sole analyst are now forecasting revenues of ₹5.66b in 2025. This would be an okay 5.0% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 24% to ₹16.20. Before this earnings announcement, the analyst had been modelling revenues of ₹5.65b and losses of ₹13.30 per share in 2025. So it's pretty clear the analyst has mixed opinions on Ramco Systems even after this update; although they reconfirmed their revenue numbers, it came at the cost of a very substantial increase in per-share losses.

Despite expectations of heavier losses next year,the analyst has lifted their price target 11% to ₹500, perhaps implying these losses are not expected to be recurring over the long term.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Ramco Systems is forecast to grow faster in the future than it has in the past, with revenues expected to display 10% annualised growth until the end of 2025. If achieved, this would be a much better result than the 3.4% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 14% annually for the foreseeable future. Although Ramco Systems' revenues are expected to improve, it seems that the analyst is still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analyst believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2027, which can be seen for free on our platform here.

Even so, be aware that Ramco Systems is showing 2 warning signs in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.