Kotak Securities research report on Oracle Financial Services Software “The 2QFY15 numbers were below expectations. Product revenues were almost flat YoY after growing by 30% YoY in 1Q. License revenues were also flat YoY after rising 117% in 1Q. We do note that, the product business is volatile. The new license signings were at $7mn ($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.”“OFSS declared a dividend of Rs.485 / share. Our FY15 and FY16 earnings estimates stand at Rs.154 (Rs.175 earlier) and Rs.157 (Rs.189 earlier), respectively. We have assumed the rupee to appreciate to be at 59.5 / USD in FY16. Our FY16-based price target stands at Rs.3475 (Rs.3604, 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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