Sonata Software - Q2FY21 Company Update - ICICI Direct

Sonata Software reported 6.8% QoQ growth in dollar revenues of IT services segment mainly led by healthy growth in travel (due to low base), 17.5% QoQ growth in retail and 6.8% QoQ growth in distribution. IT service EBITDA margin improved 98 bps QoQ to 24.4%. IT service PAT increased 14% QoQ to Rs. 43.6 crore. Domestic revenues declined 23% QoQ while PAT increased 17% QoQ mainly due to higher operating margins. Hence, overall revenues fell 16% QoQ to Rs. 803.8 crore while PAT increased 15% QoQ to Rs. 57.2 crore.

Valuation & Outlook

We expect the company to see improving revenues in coming quarters led by upgrades in Microsoft Dynamics and traction in ISV vertical, essential retail and commodity service. In addition, scaling of IP led revenues, rising proportion of digital, higher utilisation and offshoring is expected to boost margins in long run. Hence, we maintain our BUY recommendation on the stock with a revised target price of Rs. 390/share.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Sonata_CoUpdate_Nov20.pdf

Shares of SONATA SOFTWARE LTD. was last trading in BSE at Rs.347.95 as compared to the previous close of Rs. 342.9. The total number of shares traded during the day was 3414 in over 279 trades.

The stock hit an intraday high of Rs. 350.5 and intraday low of 346.9. The net turnover during the day was Rs. 1189040.

Source : Equity Bulls

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