Good Numbers
SONATA SOFTWARE Q1FY22:
(QoQ) Performance:
Revenue : 18.45% up
PBT : 4.42% up
(YoY) Performance:
Revenue : 35.7% up
PBT : 73.7% up
EPS:
JUN-20 vs JUN-21
4.8 vs 8.35
EBITDA MARGIN:
JUN-20 vs JUN-21
8.2% vs 7.96%
1 Like
Low operating margin a concern
Mgmt seems bullish for the next couple of yearsâŚfor the company and the IT services sector as well
3 Likes
Excellent Quarterly Results
Sonata Software
Stock P/E:19.9
ROCE:43.7 %
ROE: 37.2%
Last 10 yearsâ CAGR is 67%, though for the last 3 years is not so impressive 16%.
Another negative is that it has risen by about âš90 in the last one month.
Not invested.
1 Like
7 Likes
Sonata Software to consider bonus on 25Oct, also good quarter expected.
5 Likes
Good Sets of Results from Sonata Sofware in a tough environment.
The company is making key bets, especially in the AI and generative AI space. Sonata aims to lead the AI wave from the front with its AI power solutions of Harmoni.AI and we expect that to be a 25% of our revenue in two to three yearsâ time from now.
- Dividend of Rs. 7 per share ( Record Date: 1. 7th November, 2023)
- bonus issue of 1 (one) equity share for every 1 (one) equity
Vision of the company:
Deals in Pipeline:
4 Likes
Hi, any idea on what is the record date for the bonus issue?
1 Like
Answering my own question, record date is fixed at 12th December [Explains the surge in share price yesterday, even though announcement came later]
2 Likes
Hi, itâs been an year. Did you choose to invest in Sonata Software? The revenue increase has been as per management guidance, and Sonataâs 20% profit comes up from BFSI. I am positive about itâs upcoming result.
The market is highly rewarding good result in IT (OFSS), and punishing bad results (LTIM)
2 Likes
Anticipating good results based on management commentary during Q2 earnings call and also in late December. Invested.
Good results but overall loss in quarter due to Quant Systems acquisition.
Also company had to pay extra 17 Crore extra due to change in valuation of Quant.
https://www.bseindia.com/xml-data/corpfiling/AttachLive/5eb750c4-25fb-4697-a1cf-6e5ab404e50f.pdf
6 Likes
Sonata Software (SONATSOFTW) Q4 FY24 Earnings Call Highlights
Financial Performance:
- International Services:
- QoQ revenue decline of 2.4% (2.2% in constant currency).
- YoY revenue growth of 24.1% (24.3% in constant currency).
- Strong EBITDA performance.
- PAT decline QoQ, but growth YoY.
- Stable DSO at 45 days.
- Domestic Business:
- Strong YoY gross contribution growth.
- PAT growth QoQ and YoY.
- Overall:
- FY24 saw a robust 34.3% YoY revenue growth.
Operational Performance:
- Large Deals:
- Success with 14 large deals in FY24.
- Delay in healthcare sector deal, but active and expected to pick up.
- Healthy large deal pipeline with significant Fortune 500 presence.
- New Logo Wins:
- 45 new logos added, including Fortune 500 companies in Q4.
- Strategic Bets:
- Progress in Microsoft Fabric and AI & GenAI initiatives.
- Client Concentration:
- Focus on expanding client base, particularly in higher revenue segment.
- Headcount & Utilization:
- Slight decline in headcount, but improved utilization.
- Vertical Performance:
- Expectation of growth in Hi-Tech and Healthcare sectors.
Future Outlook:
- Expectation of near-term flat to slightly positive growth, with acceleration in second half of FY25.
- Confidence in medium and long-term growth driven by large deal pipeline and strategic investments.
- No immediate M&A plans, but open to opportunities next year.
Concerns:
- Lengthening deal closure cycles causing revenue recognition uncertainty.
- Margin pressure due to investments and onsite-offshore mix shift.
- Muted growth expected in BFSI and Retail sectors.
Other Important Points:
- Commitment to Responsible AI offering and employee training.
- Recognition as fastest growing IT service provider by HFS Research.
- Continued investment in people and diversity initiatives.
8 Likes
The recent correction makes the stock a very compelling buy.
The company is operating in an industry which has severe headwinds where the large players are taking a beat.
However, the bet is extremely favourable (imo) as it operates in very lucrative and growth industries like * Healthcare, Life Sciences, BFSI, Retail Manufacturing, and TMT across key geographies. Aiming to reach $1.5 Billion revenue by FY26.
Valuations are coming down and increasing the Risk Reward Ratio
6 Likes
So do you think that the current falling trend in share price is due to the one-off bad quarter and this might revert in future?
never buy a falling stock, the market knows better than us, avoid buying now and only buy once it starts going up
3 Likes
ValuePickr community,
Need some help to understand sonata business better as I was looking at operating margins for over last few years and they have always been in single digit(8+9%). I compared it against the other IT players and almost all of them have numbers in upwards of 15-25%, except tech Mahindra currently. Is this part of strategy for sonata team to keep numbers low to win the deals and why are these abysmally low compared to its peers. I am trying to learn about if this will always be the case for sonata in future as well OR if margins will eventually move closer to the industry benchmark
Disclaimer: Invested recently
3 Likes
FY25Q1 concal Summary:
- Aims to achieve $1.5 billion in revenue by the end of FY '26 for its international business, with an EBITDA margin in the low 20s.
- 3 new big deals: Healthcare company in US (a 7 year deal), Manufacturing in Australia, BFSI in US. The Healthcare deal requires some initial investments in AI, which will lead to some short term margin impact. Itâs onsite right now and will be taken offshore in a few quarters.
- Sonataâs pipeline in cloud and data now represents 52% of the total pipeline, compared to 15% two years ago. The book-to-bill ratio stood at 1.24 for the International Services business, indicates a healthy demand.
- Sonata now has 21 clients with an annual revenue run rate exceeding $3 million, compared to 16 last year.
- There are 4 verticals in which Sonata is: Healthcare and Life Sciences, Banking, Financial Services, and Insurance (BFSI), Retail, Manufacturing and Hi-tech TMT (Technology, Media, and Telecom).
Tailwinds in Healthcare and Life sciences while headwinds due to delays in deal decision-making and slow project completion in the UK, Europe and retail manufacturing. Also, the new Healthcare deal will be dilutive for the first two to three quarter and get profitability at the end of the fiscal year. - There was impact on Profitability due to: Forex losses, change in taxation due to SEZ moving into the second 5-year bracket and investments in AI for the new client.
- The declines in ROCE and RONW is due to increase in borrowing from $43 million to $75 million.
- The guidance for $0.5 billion to $1.5 billion target was that it will be delayed by 2-4 quarters. Healthcare will be bouncing back sooner while BFSI is taking time.
- Earlier, large deals were closed in 1-2 quarters, but now this timeline has extended to 3-3.5 quarters due to decision delays (industry headwinds).
- The Domestic business model is volume-driven with inherently low margins, to measure this business the better metric to use is absolute gross contribution rather than percentage margins.
- Revenue wise H2 will be better than H1 however there will be margin pressure because of the deal.
- High Tech, BFS, Healthcare verticals are key growth verticals, while retail (consumer-facing retailers) will remain soft for the next 2-3 quarters.
- Some headwinds in Q2 & Q3 due to salary hikes, also, the healthcare deal is slightly margin dilutive compared to the companyâs average margin, but it is not loss-making.
- There are green shoots in BFS largely due to increase in discretionary spending. Also, Quant which was one of their acquisition is seasonal in nature (Q4 being softer).
- The repayment of the loan for the acquisition of Quant has been delayed due to a procedural issue with the RBI. This issue is still ongoing and may take a couple of more quarters to resolve.
Feedbacks are appreciated.
6 Likes
@swapnilr they are resellers of licensed for Microsoft products like O365, sharepoint,azure.started doing Aws and other cloud providers also recently
This business runs on significantly lower margin like <5 percent but is high on revenue
Its still a high roce recurring business but it makes the blended margin of the company(when taken with the traditional IT SERvices business ) around 8-9 business
The software reselling business is high on working capital
3 Likes
Is it b2b or b2c?
Disc: 3% of pf.