Will Sonata Software continue to rally with stellar Q3 numbers?

Revenue is up 33 per cent and net profit surged 82 per cent on YoY with strong growth from digital-based competencies like managed cloud services and digital platformation services.

Midcap software service provider Sonata Software has announced its Q3 results today post-market hours. It had a good rally with the Q3 result anticipation, 13.75 per cent up for the month, 3.75 per cent up for the day. It is expected to be a buzzing stock tomorrow because of the impressive numbers. 

Q3 earnings report:  

On a consolidated basis, Sonata Software revenue rose 33 per cent to Rs 1,858 crore on a YoY and 93 per cent up on QoQ. On a constant currency basis, revenue increased by 7.6 per cent QoQ. 

The domestic business contributed around 73 per cent of total revenue which is driven by multi-year cloud-based annuity models, which increased 142 per cent on QoQ. International business contributed the remaining 27 per cent of total revenue grew 10 per cent on QoQ. 

EBITDA grew 29 per cent to Rs 146.9 crore on YoY and up 8.3 per cent on QoQ. The EBITDA margin is 7.9 per cent which got contracted 20 bps on YoY. Domestic business is a low margin segment (2.5 per cent) contributed Rs 36.9 crore which is 25 per cent of total EBITDA. International business is a big margin segment (27.5 per cent) which contributed the remaining 75 per cent of EBITDA. 

Net Profit grew 82 per cent to Rs 97.6 crore on YoY and up 7 per cent on QoQ. The net profit margin is 5.2 per cent which got expanded to 140 bps on YoY. 

At the closing bell on Monday, Sonata Software was trading at Rs 895, up by 3.75 per cent for the day.