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Dolat Capital Report
Oracle Financial Services Software Ltd. reported revenue growth of 5% YoY at Rs 14.4 billion (our estimate: at Rs14.5 billion). Revenue miss was on account of weak signings in On-Premise license model. Robust signing of nearly $30 million in cloud segment out of $40.5 million license signing (up 47% on trailing twelve months basis) results in poor revenue recognition in Q2.
License signings for Q2 stood at $40.5 million (up 48% QoQ, up 209% YoY). Healthy hiring up 4% QoQ suggest sustained pipeline on implementation that would drive overall growth momentum in coming quarters.
Operating profit margins stood at 37.3% (DE: 40.2%) given weak license recognition in Q2 sustained investments in talent costs – net added ~384 resources QoQ as it is building capacity to meet rising implementation revenue opportunities.
Despite the result miss we believe Oracle Financial Services Software’s delivery continues to trend on improved track while healthy cloud signings adds to improved annuities and growth visibility over coming quarter.
Maintain Accumulate with discounted cash flow based target price of Rs, 4,730 (implies 17 times on FY25E).
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Also Read: Bajaj Auto Q2 Results Review - Inline; Export Realisation Under Pressure: Prabhudas Lilladher
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