BSE:532221

Stock Analysis Report

Executive Summary

Sonata Software Limited, together with its subsidiaries, provides information technology services and solutions in India, the United States, Europe, and the Middle East.


Snowflake Analysis

Flawless balance sheet with proven track record and pays a dividend.

Share Price & News

How has Sonata Software's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 532221 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.0%

532221

-3.0%

IN IT

-3.9%

IN Market


1 Year Return

-1.5%

532221

3.5%

IN IT

4.5%

IN Market

Return vs Industry: 532221 underperformed the Indian IT industry which returned 3.5% over the past year.

Return vs Market: 532221 underperformed the Indian Market which returned 4.5% over the past year.


Shareholder returns

532221IndustryMarket
7 Day-1.0%-3.0%-3.9%
30 Day-4.4%-2.6%-3.9%
90 Day7.8%4.8%-2.1%
1 Year2.8%-1.5%6.2%3.5%6.4%4.5%
3 Year99.1%75.2%63.8%54.3%19.4%12.8%
5 Year172.2%115.3%49.2%35.5%28.2%16.6%

Price Volatility Vs. Market

How volatile is Sonata Software's share price compared to the market and industry in the last 5 years?


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Valuation

Is Sonata Software undervalued compared to its fair value and its price relative to the market?

12.8%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 532221 (₹334.95) is trading below our estimate of fair value (₹383.97)

Significantly Below Fair Value: 532221 is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: 532221 is poor value based on its PE Ratio (12.4x) compared to the IT industry average (10.6x).

PE vs Market: 532221 is good value based on its PE Ratio (12.4x) compared to the Indian market (12.8x).


Price to Earnings Growth Ratio

PEG Ratio: 532221 is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: 532221 is overvalued based on its PB Ratio (4.3x) compared to the IN IT industry average (0.9x).


Next Steps

Future Growth

How is Sonata Software forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

9.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 532221's forecast earnings growth (9.5% per year) is above the savings rate (6.5%).

Earnings vs Market: 532221's earnings (9.5% per year) are forecast to grow slower than the Indian market (20.4% per year).

High Growth Earnings: 532221's earnings are forecast to grow, but not significantly.

Revenue vs Market: 532221's revenue (9.7% per year) is forecast to grow faster than the Indian market (9% per year).

High Growth Revenue: 532221's revenue (9.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 532221's Return on Equity is forecast to be high in 3 years time (34.2%)


Next Steps

Past Performance

How has Sonata Software performed over the past 5 years?

15.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 532221 has a high level of non-cash earnings.

Growing Profit Margin: 532221's current net profit margins (7.7%) are lower than last year (8.7%).


Past Earnings Growth Analysis

Earnings Trend: 532221's earnings have grown by 15.9% per year over the past 5 years.

Accelerating Growth: 532221's earnings growth over the past year (17.5%) exceeds its 5-year average (15.9% per year).

Earnings vs Industry: 532221 earnings growth over the past year (17.5%) exceeded the IT industry 7.2%.


Return on Equity

High ROE: 532221's Return on Equity (34.9%) is considered high.


Next Steps

Financial Health

How is Sonata Software's financial position?


Financial Position Analysis

Short Term Liabilities: 532221's short term assets (₹11.1B) exceed its short term liabilities (₹5.7B).

Long Term Liabilities: 532221's short term assets (₹11.1B) exceed its long term liabilities (₹1.4B).


Debt to Equity History and Analysis

Debt Level: 532221's debt to equity ratio (0.6%) is considered satisfactory.

Reducing Debt: 532221's debt to equity ratio has reduced from 18.1% to 0.6% over the past 5 years.

Debt Coverage: 532221's debt is well covered by operating cash flow (3148%).

Interest Coverage: 532221's interest payments on its debt are well covered by EBIT (152.3x coverage).


Balance Sheet

Inventory Level: 532221 has a low level of unsold assets or inventory.

Debt Coverage by Assets: 532221's debt is covered by short term assets (assets are 217.8x debt).


Next Steps

Dividend

What is Sonata Software's current dividend yield, its reliability and sustainability?

6.05%

Current Dividend Yield


Upcoming Dividend Payment

TodayFeb 29 2020Ex Dividend DateMar 06 2020Dividend Pay DateMar 27 202021 days from Ex DividendBuy in the next 6 days to receive upcoming dividend

Dividend Yield vs Market

Notable Dividend: 532221's dividend (6.05%) is higher than the bottom 25% of dividend payers in the Indian market (0.62%).

High Dividend: 532221's dividend (6.05%) is in the top 25% of dividend payers in the Indian market (2.69%)


Stability and Growth of Payments

Stable Dividend: 532221's dividend payments have been volatile in the past 10 years.

Growing Dividend: 532221's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (104.7%), 532221's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 532221's dividends in 3 years are forecast to be covered by earnings (56.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.6yrs

Average management tenure


CEO

Palem Reddy (61yo)

8yrs

Tenure

₹45,737,440

Compensation

Mr. Palem Srikar Reddy, BE (Electrical), PGDBM (IIM), has been the Managing Director and Chief Executive Officer of Sonata Software Limited since February 14, 2012. Mr. Reddy serves as an Executive Directo ...


CEO Compensation Analysis

Compensation vs Market: Palem's total compensation ($USD637.86K) is above average for companies of similar size in the Indian market ($USD385.15K).

Compensation vs Earnings: Palem's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Palem Reddy
CEO, MD & Executive Director8yrs₹45.74m1.16% 414.6m
Jagannathan Narasimhan
Chief Financial Officer0.3yrsno datano data
R. Sathyanarayana
Vice President of Finance & Accounts0yrs₹2.72mno data
Mangal Kulkarni
Company Secretary & Compliance Officer0yrsno datano data
Amit Tyagi
Chief Marketing Officer3yrsno datano data
Madhavi Srinivas
Chief Human Resources Officer6.3yrsno datano data
P. Raju
Chief Delivery Officer4.2yrs₹9.27m0.11% 38.3m
Sujit Mohanty
Head of Sonata India Business1.1yrs₹7.12m0.11% 39.7m
Rajsekhar Roy
Global Head of Microsoft Dynamics2.3yrs₹2.55mno data
Gyana Pattnaik
Senior VP of Client Services & Head of Digital Competencies1.1yrsno datano data

2.6yrs

Average Tenure

53yo

Average Age

Experienced Management: 532221's management team is considered experienced (2.6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Palem Reddy
CEO, MD & Executive Director8yrs₹45.74m1.16% 414.6m
Jnana Dash
Member of Advisory Board6.3yrsno datano data
Radhika Rajan
Non-Executive Independent Director5.5yrs₹4.39mno data
Pradip Shah
Independent Chairman0yrs₹4.33mno data
Shyam Ghia
Non-Executive Director0yrs₹4.49m0.0048% 1.7m
Sanjay Asher
Additional Independent Director0.5yrsno datano data
Viren Raheja
Non-Executive Director11.8yrs₹4.29m22.53% 8.1b
Sriram Dasu
Member of Advisory Board6.3yrsno datano data

6.3yrs

Average Tenure

63yo

Average Age

Experienced Board: 532221's board of directors are considered experienced (6.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: 532221 insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Sonata Software Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Sonata Software Limited
  • Ticker: 532221
  • Exchange: BSE
  • Founded: 1994
  • Industry: IT Consulting and Other Services
  • Sector: Software
  • Market Cap: ₹35.842b
  • Shares outstanding: 103.86m
  • Website: https://www.sonata-software.com

Number of Employees


Location

  • Sonata Software Limited
  • 1/4, A.P.S. Trust Building
  • Bull Temple Road
  • Bengaluru
  • Karnataka
  • 560019
  • India

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
532221BSE (Mumbai Stock Exchange)YesEquity SharesININRJul 1999
SONATSOFTWNSEI (National Stock Exchange of India)YesEquity SharesININRJul 1999

Biography

Sonata Software Limited, together with its subsidiaries, provides information technology services and solutions in India, the United States, Europe, and the Middle East. It offers software development, technical, and product marketing services, as well as consulting services. The company delivers solutions for customers in travel, retail, manufacturing, distribution, and software industries, as well as for independent and consumer software vendors through IP-led platforms, such as Rezopia, Brick & Click Retail, Kartopia, Halosys, Modern Distribution, and Rapid Engineering. It also provides analytics and mobility solutions, as well as enterprise resource planning, application development and management, testing platform and solution, infrastructure management, and cloud services; and resells product licenses of software companies. Sonata Software Limited has alliances with SAP, Microsoft, IBM, Oracle, and HP. The company was incorporated in 1994 and is headquartered in Bengaluru, India. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/28 12:43
End of Day Share Price2020/02/28 00:00
Earnings2019/12/31
Annual Earnings2019/03/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.