Sonata BSE ID : 532221 NSE ID : SONATSOFTW RECOMMENDED PRICE 127.15 CURRENT PRICE 127.15 0.00% Sonata Software Sonata Software, headquartered in Bangalore, India, is a leading IT consulting and services company. Sonatas customers are located across the US, Europe, Middle East and the Asia-Pacific region. The company has strategic alliance with Microsoft (Gold Certified Partner), SAP (Gold Partner), IBM (Business Partner), Oracle (Platinum Partner) and HP (Platinum Business Partner). The company has registered sharp results for the quarter ending June 2014. The revenues from operations grew by about 22% to Rs.417 crores vs. Rs.340.71 cr. in the preceding quarter while it remained flat on y-o-y. Operating profit climbed sharply by ~162% at Rs.39.10 crores as against Rs.14.93 crores in the previous year quarter. The adjusted net profit(before exceptional item of income tax refund of Rs.1.64 crores) stood at Rs.30.41 crore for the quarter as against Rs.7.69 crore; registering a growth of ~295% and 29% on a sequential basis. On the margins front, operating margin climbed about 576bps at 9.37% as against 3.61% while net profit margin expanded 543bps at 7.29% from 1.86% y-o-y. This is again another quarter of highest revenues and growth for us in terms of people, in terms of profits, in terms of utilization, realization and so on. Company continues to be debt-free and it only borrows for working capital requirements on a sporadic basis. As a part of expanding near shore service delivery capabilities the company has opened a Development Centre facility at Redmond, USA and has also opened operations in Australia. Valuation With improving operating metrics, restructuring process paying off, healthy balance sheet, large deal wins and improving margin profile; Sonata Software Ltd. growth prospects and profitability looks optimistic. We believe the company is trading at an attractive valuation at 11.88x and 8.94x of FY15EPS of Rs.10.70 and FY16EPS of Rs.14.22. We initiate a BUY on the stock with a target price of Rs.175 (appreciation of about 37%) with the medium to long term investment horizon. Disclosure of Interest Statement - Company Name 1. Analyst Ownership of the Stock - No 2. Hem & its Group Company Ownership of the Stock - Yes 3. Hem & its Group Companies Director Ownership of the Stock - Yes 4. Broking relationship with company covered - No For full details, Click on the attachment. SonataSoftware_HemSec_Multibagger.pdf
Posted on: Tue, 07 Oct 2014 03:37:13 +0000
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