Sonata Software on strong growth path on healthy deal pipeline

Bengaluru, 7 August Mid-tier IT services company Sonata Software is likely to see acceleration in its revenue growth in the coming quarters on the back of revival in travel segment coupled with healthy deal pipeline.

In the just ended June quarter (Q1 of FY22), revenues increased 17.5 per cent in sequential basis to Rs 1,268.5 crore, while its profit grew 4 per cent at Rs 86.7 crore.

Sonata Software draws around 30 per cent of its revenues from IT services and around 70 per cent from product licensing & deployment.

Its IT services revenues in dollar term increased 1.5 per cent quarter on quarter to $44.5 million in Q1 of FY22.

"We see improved traction in retail, commodity & manufacturing and healthy demand from its travel client. We expect FY22 to witness robust growth in revenues," wrote ICICI Securities in a note.

Though the first quarter revenues were impacted by supply side challenges, which was primarily due to the pandemic, the company is likely to manage these aspects well with increased normalisation.

The company's acquisition of Encore is expected to boost its revenues in coming quarters. Encore specialises in cloud apps and on-premise app modernisation. The IT firm is also witnessing a healthy pipeline of outsourcing contracts, which augurs well for its future growth.

"The company has hired leadership for digital technology, head of Australian unit and sales people for onsite locations, which will help drive growth," wrote ICICI Securities.

The share price of Sonata Software closed at Rs 845.20 on Friday, up 3.86 per cent over the previous day.