Buy Sonata Software, target price Rs 840: ICICI Direct

ICICI Direct has buy call on Sonata Software with a target price of Rs 840. The current market price of Sonata Software Ltd. is Rs 795.65. Time period given by analyst is 2 weeks 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 8267.62 Crore) operating in IT Software sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 1094.63 Crore, down -21.78 % from last quarter Total Income of Rs 1399.41 Crore and up 16.34 % from last year same quarter Total Income of Rs 940.86 Crore. Company reported net profit after tax of Rs 83.06 Crore in latest quarter.

Investment Rationale
The midcap IT space continue to outperform with most of the stocks placed at their all time high. The share price of Sonata Software is in strong up trend forming higher peak and higher trough in all time frame.

The stock is seen forming a higher base at the rising demand line joining lows since February 2021 and 20 days EMA (currently placed at Rs 738) thus provides fresh entry opportunity.

The brokerage expects the stock to maintain positive bias and head towards Rs 840 levels being the price parity with previous up move (Rs 589-750) as projected from the recent trough of Rs 674 signals upside towards Rs 840 in coming weeks.

Promoter/FII Holdings
Promoters held 28.17 per cent stake in the company as of March 31, 2020, while FIIs held 11.66 per cent, DIIs 13.64 per cent and public and other 46.53 per cent.