“We continue to remain optimistic about the long-term growth prospects, the progress that we are making whether it’s large deals, M&A integration as well as driving capabilities in the company. In FY ’24, as we start the new fiscal, we have 2 tailwinds 1 potential headwind. The 2 tailwinds are the large deal that we announced and the Quant acquisition we announced. And then there is a potential headwind on the TMT softness in few select clients. All-in, we expect to deliver a strong upcoming quarter and expect to stay bullish about our growth prospects in FY ’24 and we expect to deliver a Top 25% quartile performance in the industry.”
-Samir Dhir, CEO & Managing Director
Stock Data
| Ticker | SONATSOFTW |
| Industry | IT |
| Exchange | NSE & BSE |
Share Price
| Last 1 Month | -2.1% |
| Last 6 Months | 70.6% |
| Last 12 Months | 98.4% |
Business Basics
Sonata Software Limited is a leading global technology company specializing in software development, IT consulting, and digital transformation services. With a strong presence in the IT industry, Sonata Software caters to a diverse range of clients across various sectors, including retail, distribution, manufacturing, travel, and healthcare. The company offers a comprehensive suite of services designed to address the evolving needs of businesses in the digital age. These services include application development and maintenance, data analytics, cloud computing, mobility solutions, and enterprise resource planning (ERP) implementations. Sonata Software combines its deep domain expertise, advanced technology capabilities, and global delivery model to deliver innovative and customized solutions that drive business growth and transformation for its clients.
Sonata Software has established strategic partnerships with leading technology providers such as Microsoft, SAP, and Oracle. These partnerships enable the company to leverage cutting-edge technologies and platforms to deliver state-of-the-art solutions to its clients. Sonata Software’s strong focus on research and development ensures that it stays at the forefront of technology trends, enabling it to offer innovative solutions and stay ahead of the competition.
Sonata Software operates globally, with a presence in North America, Europe, and the Asia Pacific region. The company’s global delivery centers and a strong network of partners enable it to effectively serve clients across geographies. Sonata Software’s global delivery model ensures seamless project execution, cost optimization, and efficient resource allocation. Sonata Software actively invests in emerging technologies such as artificial intelligence (AI), machine learning (ML), blockchain, and the Internet of Things (IoT). The company’s innovation labs and Centers of Excellence focus on exploring and harnessing the potential of these technologies to develop cutting-edge solutions that drive digital transformation for its clients.
Q4 FY23 Financial Performance
Sonata Software Limited reported Total revenue for Q4 FY23 of ₹1,938.47 Crore, up from ₹1,508.66 Crore year on year depicting a growth of 28.5%. Consolidated Net Profit of ₹113.77 Crore, up 12.7% from ₹100.9 Crore in the same quarter of the previous year. The Earnings per Share is ₹8.2 for this quarter.
Sonata Software’s Acquisition Of Quant Systems
In this quarter, Sonata paid all cash for the acquisition of Quant Systems, a provider of IT support and software based in Texas. This is the largest acquisition in Sonata Software’s history. In fiscal year (CY) 22, Quant generated revenue of $37 million and EBITDA of around 30%. Quant brings two sizable clients to Sonata who will rank among Sonata’s top five clients right away. This is consistent with Quant’s investment strategy in the BFSI and healthcare sectors. The BFSI client is one of the clients, and the healthcare client is the other.
The company has made significant progress integrating Quant into Sonata over the last seven to eight weeks. The two teams have now been completely integrated. The main goal of making the deal in the first place was to expand the company’s footprint into BFSI and health care, and the management is diligently working to create large & midsized deals.
Sonata Software’s Contracts & Deals For Q4
Sonata Software announced two large deals in the second quarter and four in the third quarter. The company closed three major deals in the previous quarter, one of which was the biggest deal Sonata has ever closed. The largest-ever Sonata dealer signed a $160 million, 10-year contract. One of the biggest private equity firms supports this client, which also has a very strong cash flow and double-digit profitability. The client, who is a brand-new logo for Sonata, will immediately join the list of the Top 5 customers of the business. Sonata will assume control of all the technology towers, including people transfer, as part of this 10-year strategic modernization agreement, which supports the U.S. localization strategy. Additionally, it will be in charge of comprehensive IT modernization and transformation. To help its future clients modernize and transform their core application suite and build an omnichannel, connected business with a 360-degree view of their customers, Sonata is developing a single platform.
When delivering this program, Sonata will use its knowledge and abilities in the areas of Azure, AWS, enterprise data, automation, cloud optimization, and CRM. Additionally, the company closed 2 other sizable deals in the quarter, bringing total revenue up over 12% from the previous quarter. One of the two other sizable deals the company secured is a significant multiyear contract with a top network service provider. Using its modernization capabilities, Sonata signed a multiyear contract to collaborate on strategic business and technological transformation initiatives for customers with a focus on delivering operational excellence and efficiencies. This agreement spans several years. The third transaction involves managed services for the Microsoft platform, which integrates Microsoft technologies with other IT solutions. With one of the biggest manufacturers outside of the United States, this is a significant multiyear agreement as well.