Product Performance Spurs Oracle Financial Services’ Results
Suparna / 08 May 2013
In the March 2013 quarter, the company has seen growth in its topline and margins. Though IT solutions & consulting services and business process outsourcing services have shown a lethargic performance, the product segment has held up the numbers.
In its Q4FY13 results, Oracle Financial Services Software (OFSS) posted a good set of numbers that reflects topline growth and an improvement in margins. The promoters of the company intend to reduce their stake by 5.3% to comply with the shareholding regulations of SEBI. The stock is currently trading lower by over 4%.
For the elapsed quarter, OFSS reported revenues of Rs 881.5 crore as against Rs 852.8 crore in Q3FY13, marking a growth of 3.37%. The company saw robust growth coming in from products, displaying strong momentum in product licensing. This segment, which comprises more than 75% of its total revenues, grew by 9.11% sequentially. The revenues from its other two segments, IT solutions & consulting services and business process outsourcing services declined by 12.89% and 8.14% respectively as compared to that seen in Q3FY13. This resulted in the moderation of revenues overall.
OFSS registered sequential growth of 17.63% in its operating profit to touch Rs 314.3 crore and its net profits were higher by 4.85% at Rs 281.3 crore. This translates into an improvement in its operating profit margin (433 basis points) and net profit margin (45 basis points). Growth in the profitability of the product business was robust, going up by 33.90% sequentially. However, profitability from IT solutions & consulting services and business process outsourcing services declined by 49.72% and 53.85% respectively, thus dragging total figures down.
The impressive performance on the product front has covered up for the underperformance in other areas and made the overall results seem good. The product performance also makes us bullish on the prospects of the company.
The other update on OFSS has been on the shareholding front. As of March 2013, its public shareholding stood at 19.7%. To comply with the shareholding requirements prescribed by the SEBI, the promoters of OFSS intend to reduce their shareholding by the way of an offer for sale (OFS) issue at the earliest possible subject to market conditions (in any event prior to June 3, 2013), in order to be eligible for trading.
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