Axis Securities's research report on Oracle Fin ServOFSS delivered in-line license fees at USD 23 mn (Q3FY15:16mn) but higher bonus provisions, lower revenue bookings in services business and elevated attrition impacted EBITDA. Segmental margin both in Product/Services segment were down QoQ. Forex loss and higher tax rate (~35%) led to PAT being lower than our estimate.Q3 witnessed deal wins across Asia, Africa, Europe and the U.S. leading to revenue visibility. While deal pipeline remains healthy with strong momentum in digital and compliance related spends, emerging concerns in BFSI vertical can impact growth. Margin may be impacted due to higher attrition rate (>20% for 8 quarters).Our license fee assumptions for FY16/17 largely remain intact at USD 93/ USD 117mn. However, continued weakness in services business, lower margin in product business in Q3, elevated attrition and higher tax assumptions lead us to reduce our FY17 earnings by ~11%. Tax rates to increase by ~200 bps due to operations in high tax countries. We revise our TP to Rs 3,400 (earlier: Rs3,804). Maintain HOLD given 3% upside from CMP ofRs3,309. The stock trades at 17x /15x FY17E/FY18E EPS of Rs 200/Rs 224. 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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