Buy Sonata Software, target price Rs 1085: HDFC Securities

HDFC Securities has buy call on Sonata Software with a target price of Rs 1085. The current market price of Sonata Software is Rs 861.8. Time period given by analyst is one year when Sonata Software Ltd. price can reach defined target.

Sonata Software Ltd., incorporated in the year 1994, is a Mid Cap company (having a market cap of Rs 9041.60 Crore) operating in IT Software sector.

Sonata Software Ltd. key Products/Revenue Segments include Computer Software, Software Products and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 1873.29 Crore, up 91.80 % from last quarter Total Income of Rs 976.70 Crore and up 33.86 % from last year same quarter Total Income of Rs 1399.41 Crore. Company reported net profit after tax of Rs 97.67 Crore in latest quarter.

Investment Rationale
The brokerage expects IITS growth of +26.4/+20.1/16.2% and DPS growth of +30.7/21.2/21.7% for FY22/23/24E. IITS margin will be at 23.3/22.9/23.3% and DPS margin at 3.5/3.5/3.6% for FY22/23/24E respectively. The brokerage expects to see revenue/EPS CAGRs of +21/28% for FY21-24E.

Promoter/FII Holdings
Promoters held 28.17 per cent stake in the company as of 31-Dec-2021, while FIIs owned 14.0 per cent, DIIs 14.65 per cent.