Shares of Sonata Software surged 8% in Friday’s early moring trade after the company reported a strong improvement in profitability and margins for the fourth quarter, despite a decline in revenue on a quarter-on-quarter (QoQ) basis.
The company posted a consolidated net profit of Rs 131 crore in Q4, marking a 25% increase compared to Rs 104 crore reported in the previous quarter. The sharp rise in profit boosted investor sentiment and supported gains in the stock price.
Sonata Software’s revenue for the quarter came in at Rs 2,536 crore, down 17.7% from Rs 3,081 crore in the previous quarter. Despite the decline in topline performance, the company managed to improve operational efficiency during the quarter.
EBIT for Q4 rose 5.5% to Rs 183 crore against Rs 174 crore in the previous quarter. The company’s EBIT margin also improved significantly to 7.2%, compared to 5.6% in the prior quarter, indicating better cost management and improved profitability.
The improvement in margins and profit growth overshadowed the revenue decline, leading to strong buying interest in the stock during the morning trading session.