Buy Sonata Software, target price Rs 725: ICICI Direct

ICICI Direct has buy call on Sonata Software with a target price of Rs 725. The current market price of Sonata Software is Rs 614.5. Time period given by analyst is 12 months when Sonata Software price can reach defined target.


Sonata Software, incorporated in the year 1994, is a Mid Cap company (having a market cap of Rs 8738.04 Crore) operating in IT Software sector.

Sonata Software key Products/Revenue Segments include Software Products, Computer Software and Other Operating Revenue for the year ending 31-Mar-2022.

Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 2277.33 Crore, up 51.11 % from last quarter Total Income of Rs 1507.09 Crore and up 21.57 % from last year same quarter Total Income of Rs 1873.29 Crore. Company has reported net profit after tax of Rs 117.66 Crore in latest quarter.

The company’s top management includes Mr.Sanjay K Asher, Mr.Pradip P Shah, Mr.P Srikar Reddy, Mr.S B Ghia, Mr.Viren Raheja, Ms.Radhika Rajan. Company has Deloitte Haskins & Sells LLP as its auditors. As on 31-12-2022, the company has a total of 14 Crore shares outstanding.

Investment Rationale
The new CEO announced a plan to double IT services revenue in four years, to be aided by large deal momentum and tuck in acquisition. Further, the brokerage is of the view that the company's strong digital capabilities are helping it to accelerate digital revenue growth enhancing digital revenue mix. i.e. 73% of mix now vs. 68% a year ago. Also, upgrades in Microsoft Dynamics and tapping Fortune 1000 clients in the medium to large category bode well for revenue growth.