Oracle Financial (Buy)

CMP: ₹3,146

Target: ₹3,910

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.