Oracle Financial (Buy)
Our analysis indicates the recent amendments in the Indian corporate tax rates could lower the effective tax rate (ETR) for Oracle Financial Services Software (OFSS) by at least 7 ppt.
Factoring the revised rates and the latest rupee/dollar exchange rate assumptions, our FY20/FY21 EPS estimates are up by 10 per cent/13 per cent. Surprisingly, the stock’s reaction has been muted (<2 per cent change since the announcement), in contrast to the rally in the broader market (+7 per cent for Nifty50) on the tax rate reset.
We see this as an opportunity to play the recovery in license sales ($49.4 million bookings over 4QFY19-1QFY20) + an attractive 6 per cent dividend yield. BUY.
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.