A company with a ‘fundamentally strong’ nature portrays a specific set of characteristics such as strong and consistent financials, lower leverage ratios, and many more.
Listed below is one such fundamentally strong stock under the Information Technology (IT) sector that is currently trading at a price-to-earnings (P/E) ratio less than the industry average:
Oracle Financial Services Software Limited
With a market capitalization of Rs 34,489.52 crores, the stocks of Oracle Financial Services Software Limited are currently trading at Rs 3,978, gaining around 1 percent as compared to the previous close of Rs 3,940.35 apiece.
The stocks of Oracle Financial Services show a symbol of being an “undervalued” one. The stock has a price-to-earnings (P/E) ratio of 18.60 which is less than the P/E of the industry of 25.94.
During the recent financial quarters, the company, due to increased cost pressure, faced a marginal dip in operating revenues as well as net profits. The former reduced from Rs 1,462.42 crores during Q1FY23-24 to Rs 1,444.48 crores during Q2FY23-24, and, the latter, during the same period, moved down from Rs 500.98 crores to Rs 417.45 crores.
Coming onto the financial ratio analysis, the company, due to the reasons mentioned above, faced a dip in the basic profitability metrics with the return on equity (RoE) reducing from 27.69 percent during FY21-22 to 25.35 percent during FY22-23, and, the return on capital employed (RoCE) declining from 36.43 percent to 35.48 percent.
According to the shareholding pattern data available for the quarter ended September 2023, the company’s Promoters hold a 72.81 percent stake, and the Foreign Institutional Investors (FIIs) hold a 7.74 percent stake in the company.
Oracle Financial Services Software Limited is a company based in India that provides a wide range of software systems, computer systems, and other consulting services. The company’s product portfolio includes investor servicing, universal banking, private banking, and collateral management capabilities.
Written by Amit Madnani
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