February 22, 2017 / 15:37 IST
We met Sonata Software’s (SSOF’s) CFO Prasanna Oke for a business update and came away enthused about FY18-19 growth prospects. Management is confident of driving growth in the International IT services (IITS) business (36% of revenues, 77% of EBITDA) with diversified IP-led offerings (40% of IITS revenue) and continued traction in Infra services (IMS).
Outlook
We expect consolidated revenue/PAT to grow at a CAGR of 19/12% for FY16-19E. We like Sonata’s scalable IP-focused business model, quality balance sheet (Net cash of Rs 19/share, 10% of Mcap), high RoE (30%), high dividend yield (5%) and reasonable valuations. Maintain BUY with a TP of Rs 244 based on 12x Dec-18 EPS.
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