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INVESTMENT INSIGHTS

Check Before You Invest : ERP Soft Systems Ltd

BSE: 530909 NSE: ISIN: INE308B01017
  |   Sector:  IT & ITES   |   Industry:  IT - Software

Snapshot

Q.1 Which industry/sub-sector does ERP Soft Systems Ltd belong to?
ERP Soft Systems Ltd belongs to the IT & ITES sector, operating specifically within the IT - Software segment.
Q.2 Is ERP Soft Systems Ltd a good quality company?
ERP Soft Systems Ltd is a quality company, based on a multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is ERP Soft Systems Ltd undervalued or overvalued?
ERP Soft Systems Ltd appears Fair, as its key valuation ratios are in line with their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 217.45 327.86
Price to Book 3.23 5.61
Price to Sales 24.21 19.18
EV to EBITDA 126 220.90
Q.4 Is ERP Soft Systems Ltd a good buy now?
ERP Soft Systems Ltd is not a good buy now, based on weak price trend analysis suggesting prices may fall. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of ERP Soft Systems Ltd?
ERP Soft Systems Ltd revenue growth is -27.2% for FY-2025, which is below its 5-year CAGR of 9.83%, indicating slower growth.

Q.2 Gross Profit margin of ERP Soft Systems Ltd?
ERP Soft Systems Ltd Gross profit margin which is the profit after deduction of direct costs, is 13.3% for FY-2025, which is above its 5-year median of 8.2%, indicating increasing margins.

Q.3 Operating Profit Margin of ERP Soft Systems Ltd?
ERP Soft Systems Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 9.32% for FY-2025, which is above its 5-year median of 8.66% indicating increasing margins.

Q.4 Net Profit Margin of ERP Soft Systems Ltd?
ERP Soft Systems Ltd Net Profit Margin is 6.29% for FY-2025, is above its 5-year median of 4.42%, indicating increasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 13.3 8.2
Operating Profit Margin (%) 9.32 8.66
Net Profit Margin (%) 6.29 4.42

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of ERP Soft Systems Ltd?
ERP Soft Systems Ltd Return on Asset is 1.3%, which is in line with its 5-year historical median of 1.27%, indicating stable asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of ERP Soft Systems Ltd?
ERP Soft Systems Ltd Return on capital employed is 2.82% for FY-2025, which is above its 5-year historical median of 2.04%. The current ROCE is below its estimated weighted average cost of capital (WACC) of 14%, indicating value preservation.

Q.7 Return on Equity (ROE) of ERP Soft Systems Ltd?
ERP Soft Systems Ltd Return on equity is 1.32% for FY-2025, which is in line with its 5-year historical median of 1.29%, indicating the business is making similar use of its shareholders capital.

Q.8 Cash conversion cycle of ERP Soft Systems Ltd?
ERP Soft Systems Ltd Cash conversion cycle is 97 days, above its 5-year historical median of 68 days, indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 0.21 0.29
ROE (%) 1.32 1.29
ROCE (%) 2.82 2.04
Cash Conversion Cycle 97 days 68 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of ERP Soft Systems Ltd?
ERP Soft Systems Ltd Debt-to-Equity ratio is 0.00, which is lower the industry average of 0.01, indicating lower debt levels in the industry.

Q.10 Debt to cash flow from operations of ERP Soft Systems Ltd?
ERP Soft Systems Ltd Debt to cash flow from operations is 0, which is at a healthy level.

Ownership & governance

D: Promoter shareholding and pledge status of ERP Soft Systems Ltd?

Q.1 Promoter shareholding and pledge status of ERP Soft Systems Ltd?
Promoters hold 55.76% of the ERP Soft Systems Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does ERP Soft Systems Ltd performance compare with that of its Peers?

Q.1 Revenue growth of ERP Soft Systems Ltd vs industry peers?
ERP Soft Systems Ltd revenue CAGR is 9.83%, compared to the industry median CAGR of 3.17%, indicating faster growth and gaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) -27.2 3.2
Gross Profit Growth (%) 23.5 18.4
Operating Profit Growth (%) -22.2 18.8
Net Profit Growth (%) 11.1 21.9
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 0.21 0.46
ROE (%) 1.32 4.22
ROCE (%) 2.82 6.49
Cash Conversion Cycle (days) 97.03 36

Valuation & price assessment

Q.1 Stock return of ERP Soft Systems Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of -1.7% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 -1.7% 6.5% -6% -57%
Q.2 Valuation ratios of ERP Soft Systems Ltd vs historical?
The current P/E ratio of 217.45 is lower than its historical median of 327.86, indicating that the stock is trading below its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 217.45 327.86 47.38
Price to Book 3.23 5.61 2.64
Price to Sales 24.21 19.18 4.79
EV to EBITDA 126 220.90 16.75

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