Our Terms & Conditions | Our Privacy Policy
IT services firm Sonata Software has seen robust traction in AI-led digital modernization projects. “Our AI and data-led service offerings are helping us consolidate existing accounts and win new ones through business process modernization,” said Rajsekhar Datta Roy, its chief technology officer. Among the large deals, the company said it has signed a cloud modernisation deal worth $73 million with a client in the tech, media, and telecom vertical, and another $56 million deal for cloud and infrastructure operations with a healthcare client. It has 30 large deals in the pipeline, which may take another 4-6 quarters on average to close.
However, pricing pressure remains a concern across the industry. “There are pressures, especially from larger organizations, where everybody is trying to be a little cautious,” Roy said, adding that the company has been able to navigate it by repositioning services as managed outcomes and leveraging AI to enhance efficiency.
Sonata Software revenue growth
The company reported modest sequential revenue growth of 13% in Q1, aided by large deal wins during the quarter, amid an otherwise tepid IT earnings season. The topline growth came even as headwinds from select clients and continued uncertainty in the macroeconomic environment, including the impact of tariffs, weighed on profit growth.
“We saw strong Q1 performance supported by a large deal signed in April and continued momentum in our BFSI, healthcare, AI, and data investments. At the same time, we faced headwinds from muted demand in retail and manufacturing, and budgetary pressures from a few specific clients,” Chief Financial Officer Jagannathan CN told Fe.
In Q1, revenue from operations rose to Rs 2,965.2 crore from Rs 2,617.2 crore in the March quarter, while net profit increased only 1.7% sequentially to Rs 109.3 crore. However, consolidated earnings before interest, tax, depreciation and amortisation, or the operating profit, were down 7.6% quarter-on-quarter to Rs 159.6 crore.
The management noted challenges in cost redeployment from project ramp-downs, which impacted overall margins. Sonata’s operating margin contracted 120 basis points to 5.4% in the June quarter.
Sonata Software India business
Moreover, their India business, which is nearly 80% of its total revenue, is a low-margin, high-volume segment. During Q1, its domestic business grew 18.6% in revenue, but profit from this segment fell about 15% due to subdued demand from the IT/ITES sector and overall seasonality.
Jagannathan said the company remains committed to its long-term margin aspiration of the low-20s. On the other hand, its smaller international business posted nearly flat topline growth, but profit from this segment increased 13.5% in the quarter.
Sonata also recorded a 2% uptick in attrition to 16%, attributed to increased competition for AI and cloud talent. The company has responded by rolling out salary hikes and promotions, and plans to hire around 600–650 people from campuses this year, in line with their hiring in the last fiscal year.
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.
Aggregated From –
Comments are closed.