Sonata Software shares shed 5% on sluggish Q4 growth

Sonata Software shares dip 5% on sluggish Q4

Sonata Software shares plunged 5 percent on May 15 after the company reported a 3 percent sequential decline in net profit to Rs 114 crore, though it was 13 percent higher than last year's. Net sales saw a decline of 15.36 percent on-quarter to Rs 1,913.50 crore in Q4 FY23 as against Rs 2,260.78 crore a year back.

Consolidated EBITDA came in 2 percent higher on-quarter and 15 percent on a yearly basis to Rs 177 crore. Sequentially, margin came in at 6.9 percent in the fourth quarter ended March 2023 compared to 6.3 percent reported in Q3FY23.

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“We are excited to report yet another quarter of Industry-leading growth. Our Rupee Revenue for Q4 FY’23 grew by 9 percent QoQ (8.6 percent in Dollar terms). Full-year rupee Revenue grew by 29 percent. (18.1  percent in USD terms). Consolidated PAT for FY’23 grew by 20 percent YoY,” said Samir Dhir, MD & CEO, Sonata Software.

“Our modernization-driven solutions enabled three large deal wins, including our largest-ever deal win of $160M. In addition, we completed the acquisition of Quant Systems in the quarter to strengthen our recently announced incubating BFSI and Healthcare verticals."

In March 2023, the IT company had completed acquisition of Texas-based Quant Systems Inc. and its subsidiaries for $65 million.

“The Q4 revenues was also helped by Quant systems (20 days revenues). As per our calculation, organic growth could be 5.3 percent QoQ and 14.3 percent YoY, which is still strong in our view. Reaching a revenue of $500 million in four years required a run rate of 20 percent CAGR in IT services and, as per our calculation, 17-18 percent mix of that number in FY27 would be contributed by Quants and the rest would be organic growth,” said brokerage firm ICICI Direct.

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The brokerage believes considering strong deal wins, improving presence in life sciences and BFSI verticals, acceleration of growth to achieve the guided number should not be a challenge.

The company’s market cap has jumped over 73 percent in the last one year and around 57 percent in the last six months. At 10.59am, the scrip was trading 2.27 percent down on the NSE at Rs 855 with benchmark Nifty IT trading 0.68 percent up at 28,219.65 points.

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