Sonata Software Limited – Investor Presentation Summary

Key Operational Highlights

  • Total headcount stood at 6,293 employees in Q1 FY27, with 5,779 in delivery, 228 in S&M, and 286 in G&A.
  • International Services utilization rate was 87.3% with LTM attrition at 14%.
  • Key drivers include a focus on AI-led transformation, deep client relationships, and scalable new client acquisition, with early wins on AI delivering measurable business outcomes.

Segment-wise Performance

International Services Business:

  • Revenue: $82.0 million (₹777.2 Cr), down 0.5% QoQ in USD but up 11.0% YoY.
  • EBITDA before forex & other income: ₹119.6 Cr (15.4% margin), down 24.0% QoQ.
  • EBITDA after forex & other income: ₹114.4 Cr (14.7% margin), down 37.7% QoQ.
  • PAT: ₹62.2 Cr (8.0% margin), down 26.1% QoQ.
  • Revenue by Geography: USA 71%, Europe 23%, ROW 6%.
  • Revenue by Vertical: TMT 36%, Retail & Manufacturing 33%, Healthcare 15%, BFSI 13%, Others 3%.
  • Revenue by Service Line: Cloud 53%, Dynamics 22%, Data 15%, Emerging 3%, Others 7%.
  • Revenue concentration: 54% from Top 10 clients, 69% from Top 20 clients.
  • Added 7 new customers in Q1.
  • Book-to-bill ratio: 1.16x.

Domestic Business:

  • Revenue: ₹2,505.6 Cr, up 42.4% QoQ and 10.1% YoY.
  • Gross Contribution: ₹78.5 Cr, up 4.2% QoQ and 14.5% YoY.
  • EBITDA before forex & other income: ₹59.3 Cr (2.4% margin), up 15.8% QoQ.
  • EBITDA after forex & other income: ₹65.7 Cr (2.6% margin), up 1.4% QoQ.
  • PAT: ₹45.9 Cr (1.8% margin), down 0.9% QoQ.
  • Revenue Mix: Cloud 89.7%, Non-Cloud 10.3%.
  • Revenue Type: Annuity 80.0%, Others 20.0%.
  • Headcount: 498 employees (370 Delivery, 124 S&M, 4 G&A).
  • DSO: 65 days.

Financial Highlights

Consolidated Performance (Q1 FY27):

  • Revenue: ₹3,279.1 Cr (10.6% YoY growth)
  • EBITDA before forex & other income: ₹179.0 Cr (5.5% margin)
  • EBITDA after forex & other income: ₹177.5 Cr (5.4% margin)
  • PAT: ₹108.1 Cr (3.3% margin)
  • EPS: ₹3.90 per share
  • Effective Tax Rate: 21.1%
  • ROCE: 21.9%
  • RONW: 20.9%

QoQ Comparison:

  • Revenue: Up 29.3% from ₹2,536.2 Cr in Q4 FY26
  • EBITDA before forex: Down 14.2% from ₹208.7 Cr
  • EBITDA after forex: Down 27.9% from ₹246.2 Cr
  • PAT: Down 17.1% from ₹130.5 Cr

YoY Comparison:

  • Revenue: Up from ₹2,965.2 Cr in Q1 FY26
  • EBITDA before forex: Up from ₹159.6 Cr
  • EBITDA after forex: Down from ₹183.8 Cr
  • PAT: Down from ₹109.3 Cr

Drivers of financial performance: Higher revenue growth in both international and domestic businesses, offset by margin pressures in international services.

Key Risks: Margin compression in international services, foreign exchange impacts, and competitive pressures in the IT services sector.

Geographical Revenue Split

International Services:

  • USA: 71% of international revenue
  • Europe: 23% of international revenue
  • ROW: 6% of international revenue

Domestic Business: 100% India-focused

Balance Sheet Snapshot

  • Cash and cash equivalents: ₹567.0 Cr
  • Net cash position: ₹67.0 Cr
  • Net working capital/GC: 0.87 (Domestic Business)
  • DSO: 62 days (International Services), 65 days (Domestic Business)

Financial Health Insights: Strong cash position with improved net cash status, though working capital requirements increased in domestic business.

Capex & Cash Flow Health

  • Capital Expenditure: Not Specified
  • Free Cash Flow: Not Specified
  • Operating Cash Flow: Not Specified
  • Net Debt Movement: Improved to net cash position of ₹67.0 Cr from ₹30.7 Cr in Q4 FY26

Investment Rationale: Focus on AI-driven transformation, strategic partnerships, and capacity expansion in high-growth areas.

Strategic & R&D Initiatives

Investments in Innovation:

  • AI & Analytics initiative focusing on agentic AI research and enterprise-grade AI orchestration
  • Foundation of Science Innovation and Development collaboration for AI-driven scientific research and startup incubation
  • 30+ year strategic partnership with Microsoft

Expected impact on growth: AI initiatives are already delivering measurable outcomes including 71% faster service operations, 50% faster implementation, 99%+ AI accuracy, and 33% faster modernization for clients.

Strategic Rationale: Expanding AI capabilities, strengthening partner ecosystems, and focusing on high-value digital transformation projects.

Industry Trends & Business Environment

Macro/Industry Trends: Growing demand for AI-led digital transformation, legacy modernization, and cloud services across global markets.

Impact on Company: Positioned to capitalize on AI adoption trends with demonstrated ability to convert AI into measurable business value across customer engagement, enterprise operations, and engineering transformation.

Management Commentary & Growth Outlook

Strategic Outlook: Focus on deep client relationships, scalable new client acquisition, and early wins on AI delivering enterprise velocity and outcomes.

FY Guidance: Not explicitly provided, but company highlighted healthy large deal pipeline and continued focus on AI-driven growth.

Risks and Opportunities: Margin pressures in international services, but offset by growth in domestic business and AI-led transformation opportunities.

ESG Updates

  • Sustainability Target: Net Zero Emission by 2050
  • 100% Tier 1 suppliers are ESG compliant and trained
  • UNGC Signatory