Revenue Beat: Sonata Software Limited Exceeded Revenue Forecasts By 30% And Analysts Are Updating Their Estimates

Sonata Software Limited (NSE:SONATSOFTW) just released its quarterly report and things are looking bullish. Performance was better than the analysts expected, with revenues of ₹21b coming in30% ahead of expectations, and statutory earnings per share (EPS) of ₹4.33 exceeding forecasts by 13%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, the consensus forecast from Sonata Software's seven analysts is for revenues of ₹108.6b in 2026. This reflects an okay 2.8% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 4.3% to ₹16.60. In the lead-up to this report, the analysts had been modelling revenues of ₹110.6b and earnings per share (EPS) of ₹16.63 in 2026. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

See our latest analysis for Sonata Software

The consensus price target fell 7.9% to ₹400, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the quarterly results. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Sonata Software, with the most bullish analyst valuing it at ₹435 and the most bearish at ₹380 per share. This is a very narrow spread of estimates, implying either that Sonata Software is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sonata Software's past performance and to peers in the same industry. We would highlight that Sonata Software's revenue growth is expected to slow, with the forecast 5.6% annualised growth rate until the end of 2026 being well below the historical 20% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.7% annually. So it's pretty clear that, while Sonata Software's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Sonata Software's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Sonata Software analysts - going out to 2028, and you can see them free on our platform here.

Even so, be aware that Sonata Software is showing 1 warning sign in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.