Prabhudas Lilladher's research report on Sonata Software
Sonata reported strong beat in International IT Services (IITS) revenue growth of +8.1% QoQ USD (Ple: 4.9% QoQ USD). Organic growth was strong at 5% QoQ USD, while inorganic business contributed $4.4 mn in revenue. Growth in IITS was driven by digital based competencies like Managed Cloud Services, Microsoft and open source platform based services. Digital revenue has grown at strong 10% CQGR over last 4 quarters. Deal pipeline continues to be healthy with multiple new digital wins. Growth is likely to remain flattish on QoQ basis in Travel in next quarter because of impact of COVID third wave and it may pick up from 1Q23. Domestic Product Services (DPS) business grew by +33% YoY aided by strong seasonality and cloud-based annuity deals.
Outlook
Our EPS estimates increase by 1.4%1.9% in FY23/FY24 led by increase in revenue growth estimates, partially offset by cut in margins. We value Sonata on 21x Sep23 EPS of INR 48 to arrive at changed TP of INR 1011 (earlier: 994). Sonata is currently trading at 19x/16x on FY23/24 earnings of INR 44/52 with Revenue/EPS CAGR of 18%/20.6% over FY22-24E. Maintain Buy.
More Info
At 16:00 hrs Sonata Software was quoting at Rs 819.80, down Rs 39.70, or 4.62 percent.
It has touched an intraday high of Rs 875.00 and an intraday low of Rs 786.35.
It was trading with volumes of 20,705 shares, compared to its thirty day average of 15,706 shares, an increase of 31.83 percent.
In the previous trading session, the share closed down 0.81 percent or Rs 7.00 at Rs 859.50.
The share touched its 52-week high Rs 1,030.00 and 52-week low Rs 353.95 on 20 October, 2021 and 01 February, 2021, respectively.
Currently, it is trading 20.41 percent below its 52-week high and 131.61 percent above its 52-week low.
Market capitalisation stands at Rs 8,620.96 crore. For all recommendations report, click here
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