Shares of Sonata Software dropped by 15.1% on Friday, reaching Rs 467 on the BSE. This happened after the company announced that it made a profit of Rs 105 crore in the last three months, which is a slight drop from Rs 106.5 crore in the previous quarter. The decline was partly because its biggest client reduced their business with Sonata, affecting their profit margins.
The company’s operating profit margins fell significantly from 6.7% last quarter to only 4.6% now. This was due to a 3% decrease from the client situation and another 0.7% hit because of bonuses to senior management.
However, compared to a year ago, Sonata did better than a year-ago loss of Rs 46 crore. Their revenue jumped by 14% year-on-year to Rs 2,842.8 crore, showing great performance in their domestic market and steady income from international services.
Looking ahead, Sonata expects a drop in revenue in the next quarter because of ongoing issues with their biggest customer. Samir Dhir, the CEO, believes this customer will return to growth by the next quarter, but there will still be an impact from earlier slowdowns.
The company is doing well in the BFSI and healthcare sectors, which bring in 39% of their revenue, helping to balance out the slower retail and TMT sectors. Sonata has also crossed the $1 billion revenue mark for FY24 and is working with over 100 customers on AI projects, expecting 20% of their revenue to come from AI-driven services in three years.
Emkay Global believes Sonata will face challenges in the short term due to specific problems with TMT clients and has lowered its earnings forecasts for the company. However, they still recommend buying the stock, setting a target price of Rs 700, suggesting the stock could rise by 48% from its current price.
Shares of Sonata ended almost unchanged on Thursday at Rs 550.30 but have dropped 43.88% over the past year and 28.84% in the last six months.
Leave a Reply