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Please refer to important disclosures at the end of this report
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Sonata Software is a global technology Company that enables successful
platform based digital transformation initiatives for enterprises, to create
businesses that are connected, open, intelligent and scalable. The company
was consistent in its operations and reported steady growth. Over the 5 years
ended FY19, its net sales and net profit increased by 13.5% and 26.8%,
respectively.
In FY19 also the company’s revenues increased by 20.7%. It’s IT services
business grew 12% YoY to $161.2 million in FY19 driven by digital and IP.
These two verticals are expected to gain traction over the coming years.
Sonata’s platformation strategy to provide IT services around IPs like
Rezopia, Halosys, Brick & Click and Retina, is yielding results. Growth in IP-
led revenues is improving employee productivity and aiding margin
expansion. Microsoft Dynamic 365 is in hyper growth phase and Sonata
being a preferred development partner is reaping benefits. Sonata strategic
acquisition of Sopris and Scalable Data will enhance Dynamics 365 offerings
and will support growth.
Growth in IP-led revenues is aiding margin expansion and Microsoft
Dynamic 365 is in hyper growth phase. Sonata strategic acquisition of Sopris
and Scalable Data will enhance Dynamics 365 offerings and will support
growth. The company’s cash flow generation being constant and debt being
almost nil, returns new acquisitions will further boost overall operations and
cash flows. Currently the stock is trading at 13.3x of its earnings and
generates 47.9% return sson capital. It also pays regular dividend of nearly
50%. Hence BUY.
BUY
CMP `351
52 Week High / Low
429/265
Avg. Daily Volume
4,784
IT-Software
Market Cap (` cr)
3,696
1
BSE Sensex
38,557
Nifty
11,499
Face Value (`)
Reuters Code
SOFT.BO
SSOF IN
0.6
Jaikishan Parmar
022 – 3935 7600 Ext: 6810
[email protected]
Sonata Software Ltd
Others |IT-Software
July 10, 2019
2
Sonata Software Ltd| IT-Software
2
Research Team Tel: 022 - 39357600 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Sonata Software Ltd
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)