2026-05-14 16:45:05
SKF India Ltd recommends final dividend of Rs. 40
Cybertech Systems and Software Ltd recommends final dividend of Rs. 4
JSW Dulux Ltd recommends final dividend of Rs. 50
LIC Housing Finance Ltd recommends dividend of Rs. 10
Chemfab Alkalis Ltd recommends final dividend of Rs. 1.25Research
OFSS - Target Price of Rs. 3100 - Dolat Capital
Posted On : 2013-06-13 20:57:18( TIMEZONE : IST )
OFSS, with its leadership positioning in banking products, is likely to benefit from improved demand (spends) in the BFSI segment (Flexcube) and increased importance of the efficient compliance system (Reveleus, Mantas). The current penetration of core banking solution is just about 12-15% across geographies. Currently, only about 15 of the global 200 retail banks have attempted a third party Core Banking Solution (CBS) rollout.
- OFSS has been among Top 2 vendors in the world for over a decade in the Retail banking - core banking solutions. Temenos the Swiss vendor has been struggling for over three years owing to unstable management and integration issues with its various acquisitions. Over the years TCS (Bancs) and Infosys (Finacle) has been able to scale up their share in the segment helped by stronger execution skills and wide sales reach across geographies. However they are yet to prove their prowess in Tier I installations.
- OFSS has registered a Topline/EBIT growth of 10%/8% in FY13 in Rs. terms (revenues flat in USD terms). The product license revenues grew by mere 12% YY and were flat at USD 62mn in terms of new signings during the year. We believe the momentum would scale up significantly as deals come through from large global banks (US, Europe, China) along with sustained deal small flow from developing markets (Asia, East Europe, Middle East and Africa).
- It has been able to maintain OPM in the narrow band of 33-36% over FY10-13 despite the steep fall in the product license revenues (down 25% over FY09/10 levels) supported by strong traction in the AMC revenues (AMC charges raised from standard 15% to 20-22% inline with Oracle Inc) and no major product development spends.
- The valuations are attractive at 15x FY15E earnings and may offer strong dividends yield going forward considering the strong cash pile (Cash per share Rs. 650) and limited Capex requirements. We maintain our positive view on the stock with a target price of Rs. 3100 valued at 18x of its FY15E earnings (10% discount to its 5 yr average historical PE multiple of 20x).
