Sonata Software Limited Just Missed Earnings With A Surprise Loss - Here Are Analysts Latest Forecasts

Investors in Sonata Software Limited (NSE:SONATSOFTW) had a good week, as its shares rose 2.7% to close at ₹768 following the release of its third-quarter results. Revenues fell 9.1% short of expectations, at ₹25b. Earnings correspondingly dipped, with Sonata Software reporting a statutory loss of ₹1.66 per share, whereas the analysts had previously modelled a profit in this period. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Sonata Software

Taking into account the latest results, the most recent consensus for Sonata Software from four analysts is for revenues of ₹106.1b in 2025. If met, it would imply a substantial 27% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 112% to ₹23.80. In the lead-up to this report, the analysts had been modelling revenues of ₹108.4b and earnings per share (EPS) of ₹24.10 in 2025. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The analysts have also increased their price target 8.1% to ₹802, clearly signalling that lower revenue forecasts next year are not expected to have a material impact on Sonata Software's valuation. 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. Currently, the most bullish analyst values Sonata Software at ₹915 per share, while the most bearish prices it at ₹690. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 21% growth on an annualised basis. That is in line with its 22% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.5% per year. So it's pretty clear that Sonata Software is forecast to grow substantially faster than its 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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 forecasts for Sonata Software going out to 2026, and you can see them free on our platform here.

Even so, be aware that Sonata Software is showing 3 warning signs 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.