- 31 Jul 2023
- ICICI Securities
HEALTHY ORGANIC GROWTH AND MARGINS IMPROVEMENT
SONATSOFTW - 395 Change: 4.15 (1.06 %)News: The company reported a consolidated revenues of Rs 2036 crore, up 5.7% QoQ. The international IT services business (31% of the mix) at US$ 77.3 mn was up 4% QoQ on organic (constant currency basis). The IT services reported QoQ revenues growth of 17.5% was boosted by Quant integration impact during the quarter. The company reported an EBITDA margin of 10.2% on consolidated basis, up 97 bps QoQ. This was largely driven by IT services business, which reported a margin of 23.8%, up 61 bps QoQ, aided by Quant, in our view, which commands superior margins of 30-35%.
Views: The growth of 4% QoQ on organic basis is decent considering other peers reported numbers. The company has outlined 3-4% 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. We believe strong deal wins (won 2 large deals in Q2), enhancing presence in life sciences and BFSI through Quant, should enable the company to attain its growth targets.
Impact: Positive