Software Stock Hits Upper Circuit After EBITDA Margin Doubles to 29% in Q4

A midcap software stock hit upper circuit today, after the company reported a sharp improvement in its fourth-quarter operating performance. The company reported a substantial improvement in operating performance, most notably a more than 100 percent increase in EBITDA on a sequential basis. Despite a full-year net loss, the strong finish to the fiscal year has significantly boosted investor sentiment.

The company in focus is Ramco Systems Limited, a global provider of enterprise resource planning (ERP) software and related services. Headquartered in India, Ramco offers cloud-based solutions across payroll, aviation, logistics, and core ERP verticals. The firm has undergone a strategic shift in recent years, transitioning its delivery model toward software-as-a-service (SaaS) to improve scalability, profitability, and customer retention.

Q4 Performance

For the quarter ended March 31, 2025, Ramco Systems reported global consolidated income of USD 18.36 million, equivalent to ₹157.6 crore. The net profit for the quarter stood at USD 0.67 million, or ₹5.3 crore. However, the standout figure was the quarterly EBITDA, which reached USD 5.21 million. This translated to an EBITDA margin of 29 percent, the highest in recent years, and represented a significant improvement over previous quarters.

On a full-year basis, Ramco posted revenue of USD 71.09 million, or ₹596.9 crore, reflecting a year-on-year increase of 10 percent. EBITDA for the year stood at USD 9.68 million, yielding a 14 percent margin. The company reported a net loss of USD 4.08 million, or ₹34.3 crore, for FY25. Although the annual bottom line remained negative, the fourth-quarter performance suggests that Ramco may be entering a more stable phase of financial execution.

SaaS Transition

Ramco’s transformation into a SaaS-driven enterprise is now reflected in its financial structure. Recurring revenue accounted for approximately 60 percent of total income during FY25. This shift enhances revenue predictability, improves margins, and supports long-term client relationships. It also reduces dependency on large implementation projects and creates a more agile cost structure.

During the year, the company launched Ramco Payce, a next-generation payroll platform that quickly gained adoption among multinational clients. In the aviation segment, Ramco introduced an updated version of its flagship product, Ramco Aviation Software 6.0, featuring artificial intelligence-driven automation and analytics. These developments helped drive client acquisition and supported the uptick in quarterly performance.

Order Book

As of March 2025, the company’s unexecuted order book stood at USD 166 million. This backlog provides a high level of revenue visibility and underpins the company’s outlook for FY26. The order book includes long-term SaaS contracts and multi-phase enterprise deployments across various geographies and sectors.

Ramco continues to expand its global presence, operating in over 25 countries. It serves a diverse customer base across Asia, the Middle East, Europe, and North America. The company’s ability to offer industry-specific solutions remains a key differentiator in a competitive software landscape.

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Market Reaction and Outlook

The company’s stock reacted sharply to the improved performance, hitting the upper circuit and closing at ₹441. The rally was fueled by the more than 100 percent sequential growth in EBITDA, the sharp improvement in operating margin, and signs that the long-term SaaS strategy is beginning to deliver tangible results.

Although the full-year profitability remains a work in progress, the fourth-quarter performance indicates operational momentum. With a strong order book, improving margins, and growing recurring revenue, Ramco appears better positioned to pursue consistent, profitable growth in FY26.

As global demand continues to rise for cloud-based ERP and payroll platforms, Ramco Systems has the opportunity to strengthen its market presence and deliver sustainable value to shareholders.