Systems Ltd. (SYS)

A Mantrix Edge Deep-Dive Analysis

MANTRIX EDGE INVESTMENT RATING

STRONG BUY

12-Month Target Price Range

PKR 980 - 1100

Implies 30-45% potential upside

✅ VERIFIED DATA SOURCES:

Key Performance Indicators (FY2024 Actuals)

5-Year Revenue CAGR

~50%+ 🔥

(FY2019-FY2024)

FY2024 Actual Revenue

67.47B

(PKR)

Return on Equity (ROE)

24.3%

(TTM)

Debt-to-Equity Ratio

5%

(Extremely Low Leverage)

Financial Performance: Revenue Explosion (FY2019 - FY2024)

Revenue has exploded over the last five years, growing from Rs 9.88B to Rs 67.47B. This exceptional 50%+ CAGR is fueled by the company's aggressive expansion in IT exports and digital services, signaling powerful underlying business momentum.

Net Profit Trend (PKR, Billions)

While profit growth over five years is robust (~36% CAGR), the dip from FY2023 (Rs 8.69B) to FY2024 (Rs 7.46B) must be noted. This suggests temporary pressures from currency fluctuation or operational costs that require careful monitoring.

Earnings Per Share (EPS, Rs 10 FV)

Historical EPS growth has been remarkable, peaking at Rs 29.41 in 2023 before settling at Rs 25.55 in 2024. Despite the 2024 drop, the long-term trend confirms consistent and substantial growth in shareholder value.

Financial Health & Liquidity

The balance sheet is pristine. With a Debt-to-Equity of only 5% and a high Current Ratio (3.09x), the company is in a net cash position (Rs 8B+ net cash), providing exceptional stability and funding capacity.

Dividend History (Rs 10 FV)

Systems demonstrates consistency in rewarding shareholders, with a steady increase in cash dividends over the past five years (2020: Rs 3.50 to 2024: Rs 6.00). The payout ratio remains moderate (~24%), confirming reinvestment focus.

Future Outlook: SWOT Analysis

The future for Systems Ltd. appears bright, driven by global digital transformation trends. However, investors should remain aware of potential market and operational risks. This analysis outlines the core strategic factors to watch.

Strengths

  • Market leader in Pakistan
  • Strong export growth (USD)
  • Diverse, high-demand services
  • Long-term client relationships

Weaknesses

  • Dependence on key personnel
  • Exposure to PKR volatility
  • High talent acquisition costs

Opportunities

  • New markets (Middle East, Europe)
  • Growth in AI & Cloud services
  • Strategic acquisitions
  • Digital transformation initiatives

Threats

  • Global tech spending slowdown
  • Domestic political instability
  • Intense competition for talent

💰 Analyst Consensus: Investment Thesis

Investment Thesis: Systems Ltd. (SYS) - Strong Buy

Systems Ltd. presents a compelling structural growth story, underpinned by market leadership and exceptional financial performance. The firm has delivered a highly sustainable 5-year Revenue CAGR exceeding 50%, fueled primarily by robust USD-denominated export growth and expansion into high-margin AI and Cloud services.

Despite a temporary dip in FY2024 earnings (Rs 25.55 EPS) due to short-term margin pressures, the underlying profitability remains strong with a 24.3% ROE and a double-digit Net Margin. Crucially, the balance sheet remains pristine, with an extremely low 5% Debt-to-Equity ratio , providing significant resilience and capital for strategic geographic expansion.

While exposure to a global tech spending slowdown and intense talent competition poses risks, SYS’s long-term client relationships and aggressive diversification mitigate these headwinds. Our 12-Month Target Price Range is PKR 980 - 1100. We forecast continued premium valuation driven by superior growth and financial stability.