Stock Snapshot
Price Performance
Recommendation Rationale
Favorable growth outlook supported by a strong AI pipeline and margin improvement.
Basis of our Recommendation
Sonata Software is strategically positioned for moderate growth, driven by a robust AI pipeline and improving margins. The recent leadership change aims to revitalize growth amidst short-term revenue challenges and a cautious market outlook. While the company maintains healthy margins, it faces valuation pressures that could impact investor sentiment.
Why We Like This Stock
- Strong AI pipeline driving growth potential
- Improving margins despite revenue challenges
- New leadership focused on revitalizing growth
Things To Watch Out For
- Short-term revenue challenges
- Valuation pressures amid cautious market outlook
Key Parameters
Financial Snapshot
| Actuals | Forecast | ||||
|---|---|---|---|---|---|
| FY24 | FY25 | FY26 | FY27 | FY28 | |
| Revenue (Cr.) | 8,613 | 10,157 | 10,701 | 11,765 | 12,902 |
| Profit Before Tax (Cr.) | 636 | 574 | 690 | 773 | 849 |
| PBT Margin | 7.4% | 5.7% | 6.4% | 6.6% | 6.6% |
| Net Profit (Cr.) | 370 | 401 | 483 | 541 | 594 |
| EPS | 13.4 | 14.5 | 17.4 | 19.5 | 21.4 |
Company Overview
Show Company Profile
Sonata Software Limited, together with its subsidiaries, provides information technology services and solutions in the United States, Europe, the Middle East, the Asia Pacific, the United Kingdom, Australia, New Zealand, and Ireland. The company offers GCC solution; digital contact center; product engineering; SAP modernization; application management; optima; cloud modernization, such as azure, AWS, and GCP; data modernization consist of Microsoft fabric, data privacy, and snowflake; artificial intelligence, including generative AI and agentic AI. It also provides dynamic modernization comprise migration, D365 customer experience, continuous modernization, AI-Led D365 transformation, and Microsoft power platform; customer experience includes sonata CX; COTS comprising SAP CX; hyper automation, such as RPA migration factory, digital assurance, robotic, finance, SCM, and HR process automation. In addition, the company offers managed cloud and infrastructure, quality assurance, and technology consulting services, as well as blockchain technologies. It serves banking, mortgage, lending, insurance, healthcare, life sciences, manufacturing, and retail sectors. Sonata Software Limited was founded in 1986 and is headquartered in Bengaluru, India.