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- 02 Feb 2024
- ICICIdirect Research
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SONATA SOFTWARE REPORTS HEALTHY REVENUE GROWTH, STRONG PIPELINE LAYS PATH FOR SUSTAINED GROWTH AHEAD
SONATSOFTW - 395 Change: -2.90 (-0.73 %)News: Sonata Software IT services in Q3FY24 reported robust revenue growth of 3% QoQ in CC terms & 3.5% QoQ to US$ 83.7 mn. In rupee terms it reported a revenue of INR 696.8 crore, up 4% QoQ in IT services. Geography wise US (71% of mix) grew by 7.1% QoQ while Europe & RoW declined by 10.3% QoQ & 7.1% YoY. In IT services the company reported an EBITDA of INR 168.5 crore, up 2.1% QoQ & 36.8% YoY with an EBITDA margin of 24.2%, down by ~40 bps QoQ. The company during quarter won 3 large deals & added 13 new clients. In IT services the company reported PAT before exceptional items of INR 85.9 Crore with a PAT margin of 12.3%. The company mentioned that its acquired companies Quant Systems & Encore Software Services has posted stronger than expected growth which has led to higher earnout payment of US$ 21 mn to both companies for which Sonata made the provision in Q3FY24 & hence the impact on PAT during the quarter. At company level Sonata reported revenue of INR 2,493.4 crore, up 30.4% QoQ. The company reported EBITDA of INR 227.2 crore with EBITDA margin of 9.1% and PAT before exceptional items of INR 128.5 crore with PAT margin of 5.1%.
Views: The company’s growth strategy in IT services for sustained growth is on track. The company not only continues to win large deals & add new clients, but its large deal pipeline is also strong indicating that it will continue to win large deals going forward also. The higher earnout payment to acquired companies also indicate they are growing at higher than expected rate which is also aiding in the sustained growth momentum for the company.
Impact: Positive