Sonata Software Limited (SONATSOFTW) AI Stock Analysis

• Market Cap: ₹70.25B
• Dividend Yield: 2%
• Average Volume (3M): 109.98K
• Price to Earnings (P/E): 23.9
• Beta (1Y): 2.15
• Revenue Growth: 12.39%
• EPS Growth: 59.77%
• Country: IN
• Employees: 6,043
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 3.90
• Shares Outstanding: 280,424,800
• 10 Day Avg. Volume: 87,229
• 30 Day Avg. Volume: 109,976
• PEG Ratio: 0.61
• Price to Book (P/B): 5.68
• Price to Sales (P/S): 0.95
• P/FCF Ratio: 16.83
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: ₹352.50
• Price Target Upside: -3.33% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 16.57
• Revenue Forecast (FY): ₹105.21B

• Rating: 72 Outperform
• Price Target: ₹284.00 ▼(-22.12% Downside)
• Action: Upgraded Date: 03/05/26
• Date: Action: Upgraded 03/05/26

The score is driven primarily by strong financial performance (solid profitability, growth, and cash generation). This is partially offset by very weak technical conditions (price below all key moving averages with negative momentum indicators). Valuation is supportive with a moderate P/E and a ~3.1% dividend yield.

Positive Factors

Income & Margin Quality

Consistent revenue growth paired with healthy gross and improving net margins indicates durable profitability and operational control. Sustained EBIT/EBITDA strength supports reinvestment into services, pricing power on engagements, and long-term competitive positioning in enterprise IT services.

Cash Generation

Rising free cash flow and strong cash conversion demonstrate the company can self-fund growth, support managed-service contracts, and return capital. Reliable OCF underpins investment in cloud/platform capabilities and cushions against cyclical dips in project demand over the medium term.

Balance Sheet Strength & ROE

A solid equity base and strong ROE signal efficient use of capital and financial resilience. Reasonable leverage provides capacity to fund strategic acquisitions or expand delivery capacity while maintaining stability during downturns, supporting long-term service delivery commitments.

Negative Factors

Reliance on Liabilities

Dependence on liabilities creates structural exposure to credit conditions and refinancing cycles. In a sustained market disruption higher short-term obligations could force cost cutting, constrain hiring or weaken bid competitiveness for multi-year transformation programs, reducing long-term growth optionality.

Financing Activity Monitoring

Even with rising free cash flow, flagged financing activity requires monitoring: reliance on external financing or frequent capital transactions can mask operational cash volatility. Structural dependence on financing could limit strategic flexibility and increase costs if credit conditions tighten.

EPS Growth Lags Revenue

Revenue is growing faster than EPS, indicating earnings per share gains are not keeping pace. This may reflect margin pressure, mix shifts, share issuance, or rising costs and implies slower per-share value accrual for shareholders unless operational leverage or cost efficiencies improve.

Sonata Software Limited Business Overview & Revenue Model

Company Description

Sonata Software Limited, together with its subsidiaries, provides information technology services and solutions in India, the United States, Europe, the Middle East, and Australia. It also offers software development, technical, and product marketing services, as well as consulting services. In addition, the company delivers solutions for customers in retail, manufacturing, distribution, travel, service, and software industries through its software solutions, such as Brick & Click Retail Platform, Modern Distribution Platform, Rezopia Digital Travel Platform, Kartopia E-commerce Platform, Halosys enterprise development automation Platform, Commodity Trading and Risk Management Platform, and KODO. It offers its services in the areas of application management, quality assurance, analytics, information security, cloud enablement, cloud migration, and mobility. Further, the company resells product licenses of software companies, such as Microsoft, IBM, Oracle, etc. Sonata Software Limited has alliances with Microsoft. The company was incorporated in 1994 and is headquartered in Bengaluru, India.

How the Company Makes Money

Sonata Software generates revenue primarily through its IT services and solutions, which are delivered on a project basis or through long-term contracts with clients. Key revenue streams include consulting fees, software development services, and maintenance and support contracts. The company also earns revenue from its proprietary products and platforms, which are designed to enhance business processes for its clients. Significant partnerships with major technology firms and cloud service providers enable Sonata Software to expand its service offerings and access new markets, thereby contributing to its earnings. Additionally, the company benefits from recurring revenue models, particularly in areas such as cloud services and managed services, which provide a stable income stream.

Sonata Software Limited Financial Statement Overview

Summary

Strong income statement quality (revenue growth, healthy gross margin, improving net margin, and favorable EBIT/EBITDA margins). Balance sheet is solid with a reasonable debt-to-equity and strong ROE, though some reliance on liabilities adds risk. Cash flow is strong with rising free cash flow and solid cash conversion, with a note to monitor financing activities.

Income Statement

Sonata Software Limited has demonstrated strong revenue growth with a significant increase from the previous year, indicating robust business expansion. The gross profit margin is healthy, reflecting efficient cost management. Net profit margin has improved, suggesting effective control over expenses and a boost in profitability. The EBIT and EBITDA margins are also favorable, highlighting strong operational performance.

Balance Sheet

The company's balance sheet shows a solid equity base with a reasonable debt-to-equity ratio, indicating a balanced approach to leveraging. Return on equity is strong, showcasing efficient use of equity to generate profits. The equity ratio suggests a stable financial structure, though there is some reliance on liabilities which could pose a risk in turbulent markets.

Cash Flow

Sonata Software's cash flow position is strong, with a significant increase in free cash flow, demonstrating effective capital management and operational efficiency. The operating cash flow to net income ratio indicates solid cash generation capabilities. However, the company needs to monitor its financing activities to ensure sustained cash flow stability.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	105.95B	101.57B	86.13B	74.49B	55.53B	42.28B
Gross Profit	13.00B	13.25B	15.30B	10.60B	8.41B	6.65B
EBITDA	6.78B	6.89B	6.77B	6.71B	5.64B	4.06B
Net Income	4.28B	4.25B	3.08B	4.52B	3.76B	2.44B
Balance Sheet
Total Assets	0.00	47.55B	51.49B	43.57B	25.55B	19.47B
Cash, Cash Equivalents and Short-Term Investments	6.83B	6.95B	11.38B	9.30B	8.96B	7.21B
Total Debt	0.00	5.16B	7.65B	5.91B	1.59B	1.85B
Total Liabilities	-17.06B	30.49B	37.43B	30.56B	14.56B	10.41B
Stockholders Equity	17.06B	17.06B	14.06B	13.01B	10.99B	9.05B
Cash Flow
Free Cash Flow	0.00	5.76B	2.55B	2.27B	4.41B	4.41B
Operating Cash Flow	0.00	6.44B	2.81B	2.68B	4.50B	4.43B
Investing Cash Flow	0.00	-4.36B	-543.10M	-8.55B	-834.70M	-1.14B
Financing Cash Flow	0.00	-4.33B	-1.08B	1.87B	-2.71B	-621.00M

Sonata Software Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 364.65
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:SONATSOFTW, the sentiment is Negative. The current price of 364.65 is above the 20-day moving average (MA) of 283.43, above the 50-day MA of 316.67, and above the 200-day MA of 362.25, indicating a bearish trend. The MACD of -16.72 indicates Positive momentum. The RSI at 25.52 is Positive, neither overbought nor oversold. The STOCH value of 13.48 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IN:SONATSOFTW.

Sonata Software Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SONATSOFTW	72 Outperform	₹70.25B	23.90	―	2.00%	12.39%	59.77%
NETWEB	67 Neutral	₹185.09B	60.10	―	0.08%	47.18%	38.90%
MASTEK	65 Neutral	₹50.61B	14.66	―	1.62%	11.91%	-1.02%
HAPPSTMNDS	65 Neutral	₹51.87B	42.91	―	1.26%	21.31%	-16.27%
ROUTE	64 Neutral	₹30.20B	11.31	―	1.54%	6.36%	-54.41%
BSOFT	62 Neutral	₹105.72B	25.31	―	1.42%	-2.00%	-25.81%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Sonata Software Limited Corporate Events

Sonata Software Completes Dispatch of Postal Ballot Notice and Publishes Statutory Ads

Sonata Software has notified stock exchanges that it has completed dispatch of its postal ballot notice to shareholders as of 27 February 2026. The company has also published statutory advertisements in regional and national newspapers and provided remote e-voting details for eligible members whose email IDs are registered.

The communication underscores Sonata Software’s compliance with SEBI listing regulations and the Companies Act regarding shareholder communication and disclosure. By completing the postal ballot dispatch and public notices, the company is moving ahead with securing shareholder approval on matters put to vote, reinforcing governance standards and transparency for investors.

Sonata Software Updates Market on One-on-One Analyst Meeting

Sonata Software Limited has disclosed that its management held a one-on-one virtual meeting with Aditya Birla Sun Life Asset Management Company Ltd. on 20 February 2026 as part of its regular analyst and institutional investor engagement activities. The company emphasized that only publicly available information was discussed during the interaction, with no unpublished price sensitive information shared, and noted that details of the engagement are available on its investor relations website, underscoring its commitment to regulatory compliance and transparent communication with market participants.

Sonata Software Posts Analyst Call Audio to Strengthen Investor Transparency

Sonata Software Limited has notified stock exchanges that the audio recording of its analyst and investor conference call held on 6 February 2026 has been uploaded to the investor relations section of its website, in line with SEBI’s disclosure norms. The move underscores the company’s compliance with regulatory requirements and its ongoing effort to maintain transparency and accessibility of information for shareholders and market participants.

Sonata Software Announces Financial Results and Interim Dividend

Sonata Software Limited’s Board of Directors approved the unaudited financial results for the second quarter and half-year ending September 30, 2025. Additionally, the company declared a second interim dividend of Rs. 1.25 per equity share for the financial year 2025-26, with the record date set for November 21, 2025. This announcement reflects the company’s ongoing commitment to shareholder returns and its stable financial performance.

Sonata Software Engages with Institutional Investors in Mumbai

Sonata Software Limited recently conducted a series of one-on-one meetings with institutional investors and analysts in Mumbai, including Invesco Asset Management and ICICI Prudential AMC. These meetings, which did not disclose any unpublished price sensitive information, aim to strengthen investor relations and provide insights into the company’s strategic direction and market positioning.