News Earnings Ramco Systems Reports Q3FY26 Results with Labour Code Impact of Rs.214.99 MillionRamco Systems Reports Q3FY26 Results with Labour Code Impact of Rs.214.99 Million
Ramco Systems Limited reported Q3FY26 results showing consolidated revenue growth of 14.0% to Rs.1,784.96 million, but faced significant impact from Labour Code implementation. The new regulatory framework resulted in an exceptional charge of Rs.214.99 million, affecting both standalone and consolidated profitability. Despite operational improvements, the company recorded a standalone net loss of Rs.119.65 million for the quarter, while consolidated operations showed a net profit of Rs.32.12 million.
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Ramco Systems Limited announced its Q3FY26 financial results for the quarter ended December 31, 2025, with the Board of Directors approving the unaudited financial results in a meeting held on January 28, 2026. The results reflect a mixed performance, with operational improvements overshadowed by regulatory compliance costs.
Financial Performance Overview
The company's consolidated performance showed revenue growth, while standalone operations faced some challenges. The most significant impact came from the implementation of new Labour Codes, which created substantial one-time costs.
| Metric | Consolidated Q3FY26 | Consolidated Q3FY25 | Change |
|---|---|---|---|
| Revenue from Operations | Rs.1,784.96 Mn | Rs.1,565.94 Mn | +14.0% |
| Total Income | Rs.1,800.15 Mn | Rs.1,575.60 Mn | +14.3% |
| Profit Before Tax (Before Exceptional Items) | Rs.222.91 Mn | Rs.(90.54) Mn | Positive |
| Net Profit After Tax | Rs.32.12 Mn | Rs.(100.96) Mn | Positive |
| Metric | Standalone Q3FY26 | Standalone Q3FY25 | Change |
|---|---|---|---|
| Revenue from Operations | Rs.909.10 Mn | Rs.941.89 Mn | -3.5% |
| Total Income | Rs.919.06 Mn | Rs.949.41 Mn | -3.2% |
| Profit Before Tax (Before Exceptional Items) | Rs.59.54 Mn | Rs.104.76 Mn | -43.2% |
| Net Loss After Tax | Rs.(119.65) Mn | Rs.99.41 Mn | Negative |
Labour Code Implementation Impact
The most significant development during the quarter was the implementation of new Labour Codes by the Government of India, effective November 21, 2025. This regulatory change had a substantial financial impact on the company.
| Impact Details | Amount |
|---|---|
| Exceptional Charge | Rs.214.99 Mn |
| Nature | Increase in gratuity and leave liability |
| Classification | Past service cost under Employee benefits expense |
| Presentation | Exceptional Items due to materiality |
The Labour Code consolidated various existing labour legislations into a unified framework. The company assessed the financial implications, resulting in increased gratuity liability and leave liability arising from past service costs. Due to the materiality and non-recurring nature of this impact, it was presented as "Impact of Labour Code" under Exceptional Items.
Nine-Month Performance Analysis
For the nine months ended December 31, 2025, the company showed improved operational performance on a consolidated basis:
| Nine-Month Metrics | Consolidated FY26 | Consolidated FY25 | Change |
|---|---|---|---|
| Revenue from Operations | Rs.5,155.89 Mn | Rs.4,360.87 Mn | +18.2% |
| Profit Before Tax (Before Exceptional Items) | Rs.483.48 Mn | Rs.(338.86) Mn | Positive |
| Net Profit After Tax | Rs.168.91 Mn | Rs.(392.94) Mn | Positive |
On a standalone basis, the nine-month performance was affected by the Labour Code impact:
| Nine-Month Metrics | Standalone FY26 | Standalone FY25 | Change |
|---|---|---|---|
| Revenue from Operations | Rs.2,654.60 Mn | Rs.2,404.89 Mn | +10.4% |
| Net Loss After Tax | Rs.(61.39) Mn | Rs.(168.41) Mn | Improvement |
Operational Highlights
Several operational developments occurred during the quarter:
- Equity Allotment: The company allotted 49,264 equity shares under Employee Stock Option Schemes, increasing paid-up capital to Rs.374.47 million from Rs.373.98 million
- Subsidiary Closure: Ramco Systems Macau Limited, a step-down subsidiary, was voluntarily closed effective November 07, 2025, with no impact on financial results
- Employee Benefits: ESOP costs for Q3FY26 were Rs.13.24 million compared to Rs.23.39 million in Q3FY25
Other Comprehensive Income
The company reported other comprehensive income of Rs.41.19 million on a standalone basis for Q3FY26, primarily due to remeasurement of defined benefit obligations amounting to Rs.64.49 million, partially offset by foreign currency translation effects.
Earnings Per Share
The Labour Code impact significantly affected earnings per share calculations:
| EPS Metrics | Consolidated Q3FY26 | Standalone Q3FY26 |
|---|---|---|
| Basic EPS | Rs.0.87 | Rs.(3.20) |
| Diluted EPS | Rs.0.86 | Rs.(3.20) |
The company operates in a single segment of Software Solutions & Services, with global operations across multiple countries including India, Singapore, Malaysia, USA, Canada, and several other international markets.
Historical Stock Returns for Ramco Systems
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.02% | -6.10% | -26.11% | +7.43% | +16.02% | -33.45% |
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