- 26 Oct 2023
- ICICI Securities
HEALTHY IT SERVICES GROWTH; ROBUST OUTLOOK
SONATSOFTW - 398 Change: 4.55 (1.16 %)News: The company reported consolidated revenues of ₹ 2036 crore, down 5.6% QoQ as it is a seasonally weak quarter for domestic product business which degrew 10.7% QoQ. The international IT services business (35% of the mix) at US$ 80.9 mn was up 4.6% QoQ (constant currency basis). The company reported an EBITDA margin of 11.3% on consolidated basis, up 130 bps QoQ driven by IT services business, which reported a margin of 23.6%, up 87 bps QoQ.
Views: The growth of 4.6% QoQ in IT services is very strong considering other peers reported numbers. The company has outlined 3-4 years revenue target of US$ 1.5 bn (vs. US$ 0.92 bn in FY23), implying a growth CAGR of ~15% over the next 3-4 years with low 20s margin in IT services business. For FY24, it is expecting industry leading high teen growth (also aided by Quant (new acquisition integration) We believe strong deal wins (won 10 large deals won YTD), enhancing presence in life sciences and BFSI through Quant, should enable the company to attain its growth targets.
Impact: Positive