Accumulate Oracle Financial Services Software - Dolat Capital

We also maintain our positive outlook in expectancy of sustained demand in the near to medium term. OFSS continues to build upon its strong product wins in the first half of the year. We maintain our sector Outperformer rating on the stock with a target price of Rs.3250 valued at 19xFY14E.

- OFSS reported lower than expected License sales, owing to seasonal weak quarter (and Q1 for Oracle US) effect and lower booking from systemic delay in revenue booking than expected. Services revenues were affected from 'Work at risk' revenues. New license sales of USD 8.3mn and 14 new client additions in products suggest sustained traction. We maintain our positive outlook on CBS business opportunity and OFSS competitive positioning in the segment.

- License revenues in the deals that requires product customizations are booked over a period of the tenure and thus the major booking from its key win in US is expected to feature well spread over the tenure of deployment as against our anticipation of large booking in Q2 itself. However we believe the company would end up with 20% growth over H2FY12 in the rest of the year based on sustained new deal wins momentum.

- OFSS remains confident on its robust pipeline and expects H2 to be better than H1 in terms of deal closures driven by typical sales push. It has over 100 member sales team with dedicated new license sale based targets and their fiscal is in sync with Oracle US (financial year ends May). The company expects several key wins in LTM (including few large deals in Australia, Europe) to start contributing meaningfully in coming quarters, which we believe would ensure the product license revenue growth momentum.

Source : Equity Bulls

Keywords