KR Choksey's research report on Sonata Software
Sonata Software Ltd (SSOF) Q4FY22 performance was slightly lower than our estimate. Dollar Revenue was up materially by 4.3% QoQ to USD 55.7Mn (KRChoksey est. USD 56Mn). Rupee revenue grew by ~36% YoY to INR 14,636Mn (KRChoksey est. INR 14,251Mn). Reported operating margin stood at to 6.5% and reported net profit grew by 3.3% QoQ to INR 1,009Mn (KRChoksey est. INR 942Mn) with margin of 6.9%. In Q4FY22, Domestic business (Product & services) performed well, up 38% YoY basis led by cloud based annuity deals. International IT business witnessed a strong growth momentum (+30% YoY) backed by strong execution in platform, IP and alliance led businesses. Growth was mainly backed by the US (+8.1% QoQ), mainly driven by ISV (+3.2% QoQ), Retail Non-Essential (+31% QoQ), Distribution & Manufacturing (+3.5% QoQ) and Healthcare (+24% QoQ). The deal pipeline continues to be healthy and strong through multiple new digital wins from existing and new customers.
Outlook
Our target price of INR 931 is based on 20x Mar-24E EPS with EPS CAGR of 13.4% over FY22-24E.
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