(1/15)
About:
Sonata Software Ltd. is a modernisation and digital engineering company which was founded in 1986.
They have their presence in Europe, Asia-Pacific and North America. Some of their notable partners include Microsoft, Amazon and Google.
About:
Sonata Software Ltd. is a modernisation and digital engineering company which was founded in 1986.
They have their presence in Europe, Asia-Pacific and North America. Some of their notable partners include Microsoft, Amazon and Google.
(2/15)
• Sector Update:
Looming concerns of a recession had set the Indian IT sector to fall by 26% in 2022.
Union Budget 2023 allotted ₹16,549Cr to the IT ministry.
Despite this, in FY2023 the industry created 290,000 new jobs and has a workforce of over 5.4 million.
• Sector Update:
Looming concerns of a recession had set the Indian IT sector to fall by 26% in 2022.
Union Budget 2023 allotted ₹16,549Cr to the IT ministry.
Despite this, in FY2023 the industry created 290,000 new jobs and has a workforce of over 5.4 million.
(3/15)
• Sector Outlook
The Indian technology sector is expected to grow by 8.4% in FY23 to become a $245 billion sector and is on track to reach $500 billion by 2030.
• Sector Outlook
The Indian technology sector is expected to grow by 8.4% in FY23 to become a $245 billion sector and is on track to reach $500 billion by 2030.
(4/15)
• Company’s business
Sonata Software has 400+ clients around the world. They provide modernisation services like Cloud, Data & AI IOT, Quality Assurance, ERP - SAP, among others.
Their Lighting tool & Platformation technique is what sets them apart in the industry.
• Company’s business
Sonata Software has 400+ clients around the world. They provide modernisation services like Cloud, Data & AI IOT, Quality Assurance, ERP - SAP, among others.
Their Lighting tool & Platformation technique is what sets them apart in the industry.
(5/15)
• Segments:
Sonata Software has their presence in the following segments:
•Retail
•Manufacturing & Distribution
•Travel
•ISV
•Service Industries
• Segments:
Sonata Software has their presence in the following segments:
•Retail
•Manufacturing & Distribution
•Travel
•ISV
•Service Industries
(6/15)
• Q3 Numbers
Revenue up from ₹1496Cr in Q2 to ₹2261Cr in Q3
OPM down from 10% to 7%
NPAT up from 113Cr to 118Cr
EPS up from ₹8.04 to ₹8.39
• Q3 Numbers
Revenue up from ₹1496Cr in Q2 to ₹2261Cr in Q3
OPM down from 10% to 7%
NPAT up from 113Cr to 118Cr
EPS up from ₹8.04 to ₹8.39
(7/15)
• Q3 Highlights:
Won 4 large deals this quarter across different industries - TMT, BFSI, Mfg, and Retail
Utilisation grew from 82% in Q2 to 84.2% in Q3
Added a total of 20 new customers this quarter
Will start sharing order book summary from the following quarter
• Q3 Highlights:
Won 4 large deals this quarter across different industries - TMT, BFSI, Mfg, and Retail
Utilisation grew from 82% in Q2 to 84.2% in Q3
Added a total of 20 new customers this quarter
Will start sharing order book summary from the following quarter
(8/15)
Making investments in GTMs which are focused on modernisation and automation in India and international markets
In India annuity business at 76%, target of 80% - aim to get multiyear deals rather than one-off sales
Making investments in GTMs which are focused on modernisation and automation in India and international markets
In India annuity business at 76%, target of 80% - aim to get multiyear deals rather than one-off sales
(9/15)
• Human Capital:
Will continue to scale their operations by hiring 150 freshers in the following quarter
Launched Sonata Spark programme that encourages entrepreneurship
Created the role of CTO & hired Rajsekhar Datta Roy
Planning to double headcount in next 4 years
• Human Capital:
Will continue to scale their operations by hiring 150 freshers in the following quarter
Launched Sonata Spark programme that encourages entrepreneurship
Created the role of CTO & hired Rajsekhar Datta Roy
Planning to double headcount in next 4 years
(10/15)
• Key Strengths
Stock P/E lower than IT industry average
Attrition rate down from 21% in Q2 to 15% in Q3
Strong liquidity management; company maintains ₹600Cr+ at all times
ROCE in international business at 37% and Indian business at 42%
EPS grown 20.3% YoY
• Key Strengths
Stock P/E lower than IT industry average
Attrition rate down from 21% in Q2 to 15% in Q3
Strong liquidity management; company maintains ₹600Cr+ at all times
ROCE in international business at 37% and Indian business at 42%
EPS grown 20.3% YoY
(11/15)
• Weakness
High P/B ratio of 9.28
Sonata Software has seen a slight decrease in holdings by DIIs and FIIs QoQ
Margins expected to decrease by 1% to 1.5% due to wage hike in the following quarter
• Weakness
High P/B ratio of 9.28
Sonata Software has seen a slight decrease in holdings by DIIs and FIIs QoQ
Margins expected to decrease by 1% to 1.5% due to wage hike in the following quarter
(12/15)
• Numbers:
Market Cap: ₹10,795 Cr.
Stock P/E: 24.6
RoCE: 43.7%
RoE: 37.2%
PEG: 1.21
Price to Sales: 1.54
Int Coverage: 38.4
NPM: 5.20%
D/E: 0.18
• Numbers:
Market Cap: ₹10,795 Cr.
Stock P/E: 24.6
RoCE: 43.7%
RoE: 37.2%
PEG: 1.21
Price to Sales: 1.54
Int Coverage: 38.4
NPM: 5.20%
D/E: 0.18
(13/15)
• Shareholding Pattern:
Promoter: 28.17%
FII: 12.84%
DII: 13.79%
Public: 44.09%
Others: 1.09%
• Shareholding Pattern:
Promoter: 28.17%
FII: 12.84%
DII: 13.79%
Public: 44.09%
Others: 1.09%
(14/15)
Conclusion:
Sonata Software has posted good numbers in a seasonally weak quarter and the demand is definitely looking positive. Management is certain that the dip in margin that is expected due to the wage hike can be covered by operational efficiencies and
continued>
Conclusion:
Sonata Software has posted good numbers in a seasonally weak quarter and the demand is definitely looking positive. Management is certain that the dip in margin that is expected due to the wage hike can be covered by operational efficiencies and
continued>
(15/15)
the margins can be recovered in 2-3 quarters’ time. They currently have a strong 4 year plan which can catapult them to ensure a larger market share going forward.
the margins can be recovered in 2-3 quarters’ time. They currently have a strong 4 year plan which can catapult them to ensure a larger market share going forward.
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