The IT firm has retained its aspiration to achieve revenue of $1.5 billion by FY27
Debasis Mohapatra
Bengaluru, 19 September 2024
Sonata Software has changed its Go-to-Market (GTM) strategy by chasing large deals for a more sustainable revenue growth.
The company under its new CEO, Samir Dhir has brought in significant changes in its sales strategy for winning such deals, which usually give a revenue boost to IT services companies.
“After taking over, the new CEO, Samir Dhir changed the company’s GTM strategy, which now focuses on winning large deals for sustained revenue growth. He also changed the sales strategy & incentivized the team for winning large deals. The outcome is reflected in the deal wins in recent times and the large deal pipeline,” Brokerage firm, Prabhudas Lilladher said in a report.
It also said that the acquisition of Quant has given Sonata Software access to some strategic accounts, which is helping the company effectively chase the large deals through cross-selling of its full-stack offerings.
The brokerage firm came out with the report after interacting with the company management.
The IT services firm under the new CEO also reorganised the verticals for better focus. The company has integrated existing verticals into four major segments- BFSI (banking, financial services & insurance), Healthcare, Retail and TMT. Both BFSI & Healthcare are newly created under the new CEO.
“Near-term volatility in the international IT service business has created a near-term margin pressure at the consolidated level, but the management is confident of balancing the margin and growth equation in the subsequent quarters,” the report noted.
The company has retained its aspiration to achieve revenue of $1.5 billion by FY27 (13% CAGR in FY24-27E), and $500 million for international IT service (15.6% CAGR), it added.
On operating margin, the brokerage firm said that despite near-term pressure on margin, the company is likely to see some recovery towards end of the current financial year.
“The management mentioned that the margin pressure would continue throughout FY25 due to delay in ramp-up of certain deals, wage hike implementation, upfront cost for ramp-up of large deals, and continued investment in sales & delivery for sustained revenue growth,” the report said. The management expects IT services margins to recover to be more than 20% by Q4FY25 or Q1FY26.
