This MNC IT Company Stock Offers A Dividend Yield Of 5.5%, Is Debt Free, With Strong Brand

Oracle Financial Services, is a subsidiary of Oracle Corporation, US and provides IT related services to the retail banking, corporate banking, insurance technology sector etc. We tell you why the stock looks an interesting stock to buy at the current levels.

Good financial numbers

Oracle Financial Services Software reported net profits for the quarter ending Dec 31, 2021 at Rs. 435 Crore, up 1% year-over-year. Revenue for the Quarter was Rs. 1,266 Crore, up 2% year-over-year.

Operating income for the quarter was Rs. 558 Crore, down 4% year-over-year. For the nine months ended December 31, 2021, the revenue was up 5% as compared to previous nine months ended December 31, 2020, while the net income was up 8% and operating income up 5%. The company saw a strong business momentum, and signed license deals of $15.6 million in the quarter taking the cumulative license signings for the nine-months ended December 2021 to $75.3 million, 21% higher than the corresponding period last fiscal.

Good on dividend yields

Oracle Financial Services has been consistently offering very good dividends to its shareholders. The company in May last year (2021) paid a dividend of Rs 200 per share and prior to that paid a dividend of Rs 180 per share. We believe that in the coming years, with strong momentum in business the company could in fact increase its dividend.

Based on the current market price Rs 3550, the dividend yield works to around 5.60 per cent. That is fantastic from an MNC company that has a strong brand equity.

Cheap in terms of valuations

We remain confident that the company can deliver an EPS of Rs 240 going forward. If we assume that in FY 2022-23, the company does deliver an EPS of around Rs 240, the stock is not very expensive at 14 times.

Interestingly, the stock has fallen from levels of Rs 5145 to the current levels of Rs 3551, offering good long-term scope for investors. Given that the dividend yield itself is around the 5.6% yield, the stock is a good pick at the current levels for investors. However, what we do recommend is to buy the stock in small quantities and avoid buying lumpsum. Investors with a long-term perspective should accumulate the stock on declines.

Markets could see a downside

We believe that the markets can have more of a downside potential and hence investors should be careful when investing. It's important to buy small amounts and preferably by way of SIPs every month. Avoid buying large quantities as the markets are vulnerable at higher levels to a decline. With interest rates in the US likely to go higher in the coming months, we might see equities falling a bit. Make sure you buy stocks that are only fundamentally sound. The shares of Oracle Financial Services were last seen trading at Rs 3551 on the NSE.

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies Pvt Ltd and the author are not liable for any losses caused as a result of decisions based on the article. The author and has family do not own any stocks mentioned above.