Sonata Software saw its shares plummet by as much as 19 per cent to reach a 52-week low of ₹446.10 on February 7, 2025, following disappointing third-quarter margins despite exceeding revenue expectations. At 11:50 AM on the NSE, the stock was trading at ₹483.95, marking a decline of 12.26 per cent.
In the third quarter, the IT services company reported a revenue of $87 million, showing a 2.8 per cent quarter-on-quarter increase and a 3.9 per cent year-on-year growth. However, the EBITDA decreased by 7.7 per cent sequentially to ₹164 crore, with margins shrinking by 240 basis points to 5.8 per cent.
The decline in margins was attributed to various factors, including an unexpected ramp-down of a large TMT client, one-time client discount, salary hikes, and employee settlement costs. Due to these challenges, the management anticipates a 2.5-3.5 per cent sequential revenue decline in Q4.
Across different verticals, BFSI exhibited strong growth at 40.2 per cent QoQ, followed by Healthcare & Life Sciences at 13.1 per cent. On the other hand, the TMT and RMD segments experienced declines of 6.8 per cent and 17.8 per cent, respectively. In Q3, the company secured two significant deals with total order bookings of $114 million and a book-to-bill ratio of 1.2x in International IT Services.
The management is optimistic about margin recovery starting in Q4, with full visibility of the impact expected by Q1 of the next fiscal year.
As of February 7, 2025, NCC shares also fell by 10.63% due to weak Q3 results, prompting Centrum to downgrade its outlook.
Published on February 7, 2025.
