Sonata Software Limited (SONATSOFTW) AI Stock Analysis

• Market Cap: ₹88.71B
• Dividend Yield: 2%
• Average Volume (3M): 109.98K
• Price to Earnings (P/E): 19.9
• Beta (1Y): 2.13
• Revenue Growth: 12.39%
• EPS Growth: 59.77%
• Country: IN
• Employees: 6,043
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 4.30
• 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: ₹430.00
• Price Target Upside: 17.92% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: ₹347.00 ▼(-4.84% Downside)

Sonata Software Limited's overall stock score is driven primarily by its strong financial performance, which is the most significant factor. Technical analysis indicates some bearish trends, while valuation suggests moderate pricing. The absence of earnings call data and corporate events means these factors do not influence the score.

Positive Factors

Sustained revenue growth and margins

Double-digit revenue growth and improving profit margins indicate durable demand for Sonata’s services and effective cost control. Sustained top-line expansion supports reinvestment into platforms and talent, strengthening competitive position across digital transformation and managed services.

Strong cash generation

Material free cash flow improvement and solid operating-cash-to-net-income ratios show the business converts earnings into cash reliably. This enhances funding for strategic initiatives, lowers reliance on external financing, and provides a buffer for multi-quarter project seasonality.

Solid balance sheet and ROE

A solid equity base, reasonable leverage and strong ROE give Sonata financial resilience to pursue multi-year transformation contracts and absorb client payment cycles. This stability supports sustained investment in capabilities without compromising liquidity in normal conditions.

Negative Factors

Reliance on liabilities

Noted reliance on liabilities increases refinancing and liquidity risk if market conditions tighten. Higher liability dependence can limit strategic flexibility, forcing conservatism in hiring, investments or bidding on large transformation programs during stressed periods.

High sensitivity to macro/market swings

A beta above 2 implies strong sensitivity to market and macro swings. For an IT services firm this reflects cyclical demand for project work and discretionary IT spend, which can produce meaningful revenue and margin volatility across several quarters and complicate planning.

Utilization and contract-mix exposure

Heavy exposure to time-and-materials and fixed-price project mixes ties profitability to utilization and pricing discipline. Ramp variability, fixed-price overruns and concentrated client engagements can cause margin compression and cash flow swings over the medium term.

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

Sonata Software Limited shows strong financial performance with robust revenue growth, improved profit margins, and efficient cost management. The balance sheet is solid with a balanced debt-to-equity ratio, and cash flows are healthy, indicating effective capital management.

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	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 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: Neutral
• STOCH: Neutral

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 333.35, above the 50-day MA of 346.68, and below the 200-day MA of 372.41, indicating a bearish trend. The MACD of -11.80 indicates Positive momentum. The RSI at 36.87 is Neutral, neither overbought nor oversold. The STOCH value of 39.37 is Neutral, 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
ROUTE	72 Outperform	₹37.46B	21.90	―	1.54%	6.36%	-54.41%
SONATSOFTW	69 Neutral	₹88.71B	19.86	―	2.00%	12.39%	59.77%
NETWEB	67 Neutral	₹178.18B	99.98	―	0.08%	47.18%	38.90%
MASTEK	65 Neutral	₹63.64B	16.77	―	1.62%	11.91%	-1.02%
BSOFT	63 Neutral	₹116.58B	25.06	―	1.42%	-2.00%	-25.81%
HAPPSTMNDS	62 Neutral	₹62.95B	31.77	―	1.26%	21.31%	-16.27%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Sonata Software Limited Corporate Events

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.

Sonata Software Releases Q2 2025 Financial Results

Sonata Software Limited has published its unaudited financial results for the second quarter and half-year ending September 30, 2025. The results were disseminated in regional and national newspapers, reflecting the company’s commitment to transparency and regulatory compliance. This announcement is crucial for stakeholders as it provides insights into the company’s financial health and operational performance, potentially impacting its market position and investor confidence.

Sonata Software Enhances Transparency with Investor Call Recording

Sonata Software Limited announced the availability of an audio recording of its recent analyst and investor call. This move aligns with regulatory requirements and enhances transparency, allowing stakeholders to access detailed insights into the company’s financial performance and strategic direction.