Accumulate Oracle Financial; target Rs 3527: Kotak Sec

Kotak Securities' report on Oracle Financial Services Software

"The 3QFY15 numbers were below expectations. Product revenues were almost flat YoY, the second successive quarter of flattish growth. License revenues were also flat YoY. We do note that, the product business is volatile. The new license signings were at $17mn ($7mn in 2Q and $32mn in 1Q, which was one of the highest amounts of bookings in recent quarters). We understand that, the macro scene has stabilized in developed markets (largely US) and clients are opening up to discretionary spends. This should result in better order book additions, going ahead. Our FY15 and FY16 earnings estimates stand at Rs.151 (Rs.154 earlier) and Rs.160 (Rs.157 earlier), respectively. We have assumed the rupee to appreciate at 60.5 / USD in FY16. Our FY16-based price target stands at Rs 3527 (Rs.3475, earlier). We maintain ACCUMULATE, and advise buying the stock on every decline. We expect growth rates to improve, going ahead. A delayed recovery / sharp deterioration in user economies and a sharper-than-expected rupee appreciation are key risks to our earnings estimates", says Kotak Securities research report.

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