Oracle Financial Services Ltd (OFSL) - Result Update - Kotak

QFY13 numbers were lower than estimates, especially on the revenue front. Product revenues grew by only about 1% YoY after a 3% YoY rise in 3Q. License revenues fell by 8% QoQ. We do note that, the product business is volatile. The new license signings were at $22mn, which were better than $13mn in 3Q. We understand that, the uncertain macro scene is still keeping clients cautious, though the company has won deals across EMEA, USA and Asia. Our FY14 earnings estimates stand at Rs.130 (Rs.139.5 earlier). Our price target stands at Rs.2610 (Rs.2744, earlier) based on FY14E earnings. At our TP, the valuations will be similar to those accorded by us to TCS. We had recommended a REDUCE post the 3Q results. Looking at the limited upside, we maintain REDUCE. The parent, Oracle Global (Mauritius) Ltd, has announced that, it will reduce its shareholding from 80.3% to 75%, to comply with SEBI's directives. A delayed recovery / sharp deterioration in user economies and a sharper-than-expected rupee appreciation are key risks to our earnings estimates.

Source : Equity Bulls

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