Focus on large deals, AI crucial for Sonata amid short term hiccups
Sonata Software, a mid-tier IT company, has lost 18% in August so far after the company’s subdued June quarter performance due to delay in large deals. While it is likely to face challenges in the current quarter as well, Sonata expects to post better numbers in the second half of the current fiscal year given a strong order book.
Given the slower momentum in the first half of the year, analysts have reduced the estimated earnings growth rate for the full year.
Sonata provides solutions to modernise the technology infrastructure used by clients across verticals including banking, financial services and insurance (BFSI), healthcare, retail, manufacturing, travel, media and telecom around the world. For the international business, the company has a high client concentration with top 10 customers contributing half of the segment revenue.
The revenue from the domestic business constituted nearly 57% of the total revenue in FY24; this proportion increased to 64% in the June 2024 quarter as the overseas revenue growth slowed during the quarter.
Total revenue grew by 15.3% sequentially to Rs 2,527.4 crore in the June quarter led by the Indian operations as revenue from its international services business rose at a slower pace of 1.3% to $ 82.7 million. The company’s operating margin before depreciation and interest (EBITDA margin) improved by 40 basis points sequentially to 7%. The consolidated net profit fell by 4.3% to Rs105.6 crore due to lower other income.
The company had earlier guided for $ 1.5 billion in
