Buy OFSS; target of Rs 4,620: Systematix

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26 Aug, 2025 12:21

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Systematix's research report on OFSSWe attended the 26th annual general meeting of Oracle Financial Services and Software (OFSS) held on Sept 11, 2015 in Mumbai. The company’s board shared its perspective in detail on various aspects such as changing landscape in the banking industry, Oracle’s strategy to realign its business and the demand scenario across the market. Following are the key takeaways from the discussion:Banks of the future: The banking industry is seeing a disruption from the Digital medium as clients are scouting for modern solutions. The banks need to reorient and update technologies to offer unique customer experience. The three fundamental challenges facing them are: 1) change in competition (Fintech companies), 2) change in customer profile and 3) rising cost of regulations. These factors are forcing banks to prioritise the Digital transformation to address the fundamental changes and stay relevant in business.Considering the capex plan of Rs18bn for the next 3 years, we see further increase in debt from the current level of Rs14bn. This would put further pressure on earnings due to higher interest costsView: We believe that the modernisation/transformation of banking industry is long impending and is now reaching the point of mainstreaming, driven by the changed business dynamics (competition and customer profile). We believe players such as OFSS would be one of the biggest beneficiary of this business trend given its leadership position, unmatched product prowess, client reach, brand and comprehensive offerings (Oracle is the only full stack player). We expect OFSS to clock revenue/EBIT CAGR of ~9/17% over FY15-17e and maintain the stock as our preferred pick with a target price of Rs4,620, valued at 25x FY17e earnings (20% premium to TCS’ valuation, which is fair in our view given a similar revenue growth and much better OPM growth and margins), says Systematix research report.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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