- Sonata Software Ltd is a global IT solutions firm focused on catalyzing business transformation initiatives of its clients through deep domain knowledge, technology expertise and customer commitment.
- In Q3 FY18, the company achieved a consolidated turnover of Rs. 7667.46 mn which is up by 33.32% as against Rs. 5750.98 mn in the corresponding quarter of the previous year.
- During Q3 FY18, consolidated Operating profit (EBITDA) stood at Rs. 715.66 mn as against Rs. 649.85 mn in Q3 FY17, grew by 20.19%. Consolidated Profit before tax at Rs. 675.19 mn in Q3 FY18 compared to Rs. 598.51 mn in Q3 FY17, up by l2.8l%.
- In Q3 FY18, consolidated net profit increased by 22.00% to Rs. 493.16 mn from Rs. 404.22 mn in Q3 F Y17.
- The company has reported an EPS of Rs. 4.69 for the 3rd quarter as against an EPS of Rs. 3.90 in the corresponding quarter of the previous year.
- During the quarter, EBIDTA and PAT margins stood at 9.33% and 6.43% respectively.
- The company’s Net sales stood Rs. 18281.38 mn for the nine months ended Dec 31, 2017 as compared to Rs. 16850.13 mn for nine months ended Dec 31, 2016.
- For nine months ended Dec 31, 2017, Net Profit increased by 13.08% to Rs. 1378.47 mn from Rs. 1219.05 mn for nine months ended Dec 31, 2016.
- Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 12% over 2016 to 2019E, respectively.
Outlook and Valuation
At the current market price of Rs.285.50, the stock P/E ratio is at 15.46 X F Y18E and 13.93 X FY19E respectively.
Earning per share (EPS) of the company for the earnings for F Y18E and FY19E is seen at Rs. 18.47 and Rs. 20.50 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 12% over 2016 to 2019E respectively
On the basis of EV/EBITDA, the stock trades at 9.36 X for F Y18E and 8.19 X for F Y19E.
Price to Book Value of the stock is expected to be at 4.43 X and 3.47 X for F Y18E and F Y19E respectively.
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Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.
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