Sonata Software‘s shares witnessed a sharp decline of 14 percent on May 8, a day after the global IT services and technology solutions company reported a 3 percent year-on-year drop in net profit at Rs 110.4 crore for the quarter ended March 2024. The company’s revenue from operations, however, rose 14.53 percent YoY to Rs 2,191.6 crore during the same period.
Specializing in cloud and data modernization, Microsoft dynamics modernization, digital contact center setup and management, managed cloud services, and digital transformation services, Sonata Software’s shares were trading 13.87% lower at ₹549.70 on the National Stock Exchange as of 1:20 pm.
Despite the challenges, the brokerage expects the company to regain its growth trajectory based on a healthy deal pipeline and strong book-to-bill of 1.22 (TCV of $100 million in Q4).
Sonata Software’s management indicated that the macro environment remains challenging, and large-deal decision-making is slow, leading to potential near-term growth challenges. However, they maintained their aspiration to reach a $500 million run rate for IT services and technology solutions in the next two years.
HSIE maintained an ‘Add’ rating on the stock with a target price of Rs 610, based on 23x FY26E EPS, citing the company’s investments in Microsoft Fabric and Gen Ai capabilities as paving the way for future growth.