Oracle Financial Q3 Review — Result Miss, But Strong License Wins Support Healthy Outlook: Dolat Capital

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Dolat Capital Report

Oracle Financial Services Software Ltd. reported revenue decline of 6% YoY in Indian rupee terms at Rs 17.1 billion (our estimate: at Rs 17.7 billion, and 3% decline). Miss was due to weaker than expected Implementation Rev, down 10.8% YoY, due to adverse seasonality and likely delay in milestone completion.

Ebit margin lowered to 40.6% (our estimate: 44.7%), down 595bps YoY due to weak growth and wage-hike impact and travel costs (up 12%/20% YoY).

For Q3, Cloud and License bounced back with strong deal wins, that stood at ~$33 million, up 52% QoQ and up 16% on YTD basis at $87 million.

Despite the miss in Q3, a recovery in implementation is expected to drive high single-digit growth in FY25, while ongoing license wins would ensure visibility.

We lower earnings estimate by 5.8%/4.4%/3.8% for FY25E/FY26E/FY27E and maintain ‘Accumulate’ rating with DCF based target price of Rs 11,400 (implies ~33 times FY27E PER).

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