Maintain 'Buy' on Oracle Financial Services: Kotak
The management has indicated an improving demand scenario with relatively lower lead time for projects and faster decision making.
By ET Bureau |
MUMBAI: Kotak Securities has maintained ‘Buy’ recommendation on Oracle Financial Services with a price target of Rs 2457 per share.
“The management has indicated an improving demand scenario with relatively lower lead time for projects and faster decision making. However, the situation in Europe is still concerning. The order intake for license revenues in 1QFY11 at $7 million was way below $31 million booked in previous quarter.
1QFY11 results were below expectations at the operating level with products business disappointing. License revenues fell by 20% YoY and by nearly 80% QoQ. Services revenues grew 11% QoQ. Sustainability of high growth rates and margins is critical, in our opinion. We tweak FY11 EPS estimate to Rs 113 (Rs 116 earlier).
While valuations are not un-demanding, we believe that, these can be sustained in view of the improving macro scene and expected improvement in growth rates. There can be potential gains from Oracle's offer, if any, to buy-back shares and de-list the company.
We maintain BUY with a price target of Rs 2457 (Rs 2493 earlier). A delayed recovery in user economies and a sharper-than-expected rupee appreciation are key risks to our earnings estimates,” the report said.
“The management has indicated an improving demand scenario with relatively lower lead time for projects and faster decision making. However, the situation in Europe is still concerning. The order intake for license revenues in 1QFY11 at $7 million was way below $31 million booked in previous quarter.
1QFY11 results were below expectations at the operating level with products business disappointing. License revenues fell by 20% YoY and by nearly 80% QoQ. Services revenues grew 11% QoQ. Sustainability of high growth rates and margins is critical, in our opinion. We tweak FY11 EPS estimate to Rs 113 (Rs 116 earlier).
While valuations are not un-demanding, we believe that, these can be sustained in view of the improving macro scene and expected improvement in growth rates. There can be potential gains from Oracle's offer, if any, to buy-back shares and de-list the company.
We maintain BUY with a price target of Rs 2457 (Rs 2493 earlier). A delayed recovery in user economies and a sharper-than-expected rupee appreciation are key risks to our earnings estimates,” the report said.
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