OFSS Techno Funda Pick
- Aug 10, 2021 at 12:04
- Equity
Reco Price: 4458
Targets: 4658-5200-5509
Face Value: 5
Oracle Financial Services Software (OFSS) has more than 900 financial institutions as its customers located in over 150 countries. Major geographies served include US, Japan, Australia, Europe, APAC and Africa. In FY20 itself, it has added a leading bank in Japan, a regional bank in Nigeria and Central Bank of Libya as new customers. The company keeps winning international awards and recognitions each year. Their product Oracle FLEXCUBE has been recognized as a ‘Leader’ in the Gartner Magic Quadrant. Another product Oracle Asset Liability Management won ‘Product of the Year’ at Asia Risk Technology Awards 2019. The Company remained among the top three vendors in Chartis RiskTech100, 2020 for the fifth consecutive year. Company’s Key Innovation Areas: Open banking, AI, Blockchain, cloud and big data.
Valuation & View:
- Digital transformation & growing economic demand will create lots of value expansion in OFSS. Customer addition at full swing across the world during the quarter which led to revenue growth in future.
- Going forward, We expect profitability to see betterment given enhanced growth outlook and operating leverage.
- Good new licence sales in Q1FY22 has led to revenue growth uptick during FY22E-23E.
- Margin increased from 39% in FY16 to 49.5% in FY21 and going ahead we expect margin to increase further backed by robust licence sales which in turn will lead to revenue growth uptick. We expect strong revenue growth of `10% during FY22E-FY23E.
- At CMP of INR 4458, OFSS is currently trading at a P/E of 20.1x/18.4x, to its FY22E/FY23E EPS of INR 221.9/242.4 respectively. (Bloomberg Estimate). We are positive on the stock.
Tags: Techno-Funda
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