Sonata Software Limited Just Beat Revenue By 30%: Here's What Analysts Think Will Happen Next

Last week saw the newest second-quarter earnings release from Sonata Software Limited (NSE:SONATSOFTW), an important milestone in the company's journey to build a stronger business. Revenue of ₹22b beat expectations by an impressive 30%, while statutory earnings per share (EPS) were ₹11.10, in line with estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Sonata Software

Taking into account the latest results, the consensus forecast from Sonata Software's seven analysts is for revenues of ₹100.3b in 2025. This reflects a satisfactory 7.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 82% to ₹18.08. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹100.3b and earnings per share (EPS) of ₹18.43 in 2025. 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.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at ₹707. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Sonata Software analyst has a price target of ₹770 per share, while the most pessimistic values it at ₹600. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Sonata Software is an easy business to forecast or the the analysts are all using similar assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Sonata Software's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 22% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.3% annually. Even after the forecast slowdown in growth, it seems obvious that Sonata Software is also expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at ₹707, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Sonata Software going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 4 warning signs for Sonata Software that you need to be mindful of.

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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.