Stock to Buy: Multinational IT company with strong financials and large dividends

Oracle Financial Services: good on the fundamentals

Oracle Financial Services Software has consistently reported a good set of numbers over the past few quarters. In fact, the company reported EPS of Rs 190 for the 2020-21 financial year and over the next year we believe the company can report EPS of around Rs 220.

Some of the IT companies of similar size are granted a p/e of around 25 to 30 times and if we grant a similar p/e, the stock should trade around the levels of Rs 5500 to Rs 6000. However, the stock Oracle Financial Services is available at a p/e of just 16 times the one-year forward p/e, offering good room for appreciation.

Strong on dividend yields

Strong on dividend yields

Oracle Financial Services last year declared a dividend of Rs 200 per share. This means that on the share price of Rs 3700, the dividend yield works out at around 5.41%. Even today, it is difficult to find bank interest rates at these levels.

We believe the company may also increase its dividends in the future as its profitability improves. Thus, the stock is also a good choice in terms of dividend yield. Buy Oracle Financial Services stock if you are a long-term investor.

Strong growth likely for IT industry

Strong growth likely for IT industry

Sharekhan, in a recent report, stated that increasing IT spending on digital and cloud transformation initiatives by enterprises across all industries is expected to maintain strong demand momentum over the next 2-3 years.

“Demand remains robust, driven by customer urgency to build a multi-faceted digital core to stay relevant to its customers, increasing discretionary IT spending in new areas (including ESG, IoT, AI, 5G and cybersecurity) and legacy modernization Cloud migration is expected to remain strong over the next 2-3 years as only 30% of workloads have migrated to the cloud.” , the brokerage firm said in a recent report.

Warning

Warning

Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author, and the brokerage are not responsible for any losses caused as a result of decisions based on the article. It is always best to consult a professional advisor and seek professional help before investing.

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