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Sonata Software International IT services (24% of mix vs 30.7% in Q4FY26) in Q1FY27 reported revenue of US$ 82 mn

ICICIdirect Research 07 Aug 2026 DISCLAIMER

News: Sonata Software International IT services (24% of mix vs 30.7% in Q4FY26) in Q1FY27 reported revenue of US$ 82 mn, down 0.5% / up 0.2% YoY in US$ terms (up 0.1% QoQ/ 2.1% YoY in CC terms) while in rupee terms it stood at ₹777.2 crore, down 0.3% QoQ/  up 11% YoY. Domestic Products & Services (76% of mix) reported revenue of ₹2,505.6 crore, expansion of 42.4% QoQ and 10.2% YoY. The International IT services reported EBITDA ₹119.6 crore, down 24% QoQ, translating to an EBITDA margin of 15.4, down ~481 bps QoQ/ ~117 bps YoY while Domestic EBITDA stood at ₹59.3 crore, up 15.8% QoQ/ 34.8% YoY translating to EBITDA margin of 2.4% (down ~50 bps QoQ/ up ~50 bps YoY). At the company level, Sonata reported a revenue of US$ 346.6 mn, up 25% QoQ, while in rupee terms it stood at ₹3,279.1 crore, up 29.3% QoQ and 10.6% YoY. The company reported EBITDA of ₹179 crore, down 14.2% QoQ/ up 12.1% YoY with an EBITDA margin of 5.2%, down ~300 bps QoQ/ ~18 bps YoY. PAT stood at ₹108.1 crore, down 17.2% QoQ/ 1.1% YoY impacted by forex losses of ₹6.8 crore during the quarter. The company won 1 key deal and added 7 new customers in the quarter. The Board declared an interim dividend of ₹1.25 per share.

View: While international IT services growth remained modest, Sonata's commentary suggests encouraging progress in building AI-led capabilities across offerings, partnerships, delivery and go-to-market initiatives. The sharp increase in AI-led pipeline (+21% QoQ to US$340 mn) and AI led order book (+27% QoQ to US$21.7 mn) reinforces management's strategy around AI-first modernization and provides better medium-term growth visibility. The company won one AI-led legacy modernization deal while maintaining a healthy large-deal pipeline, with 37% of the active pipeline comprising large deals and 28% of large-deal opportunities coming from Fortune 500 clients. However, sustained improvement in the international services business and conversion of the expanding AI pipeline into revenue will remain key monitorables going ahead. We await management commentary for further insights.

Impact: Negative

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