Debasis Mohapatra
Bengaluru, 15 August 2024
Mid-tier IT services firm, Sonata Software is confident of posting a higher growth rate by the third quarter of the ongoing financial year on the back of a strong deal pipeline.
However, it will see two-four quarter delay in attaining $1.5 billion annual revenue from the current $1 billion owing to a difficult demand environment.
“…when we talked about, we guided that (revenue growth) will be between 1% to 3% for Q1 and Q2, which was our expectation, and I think we come within the range of what we have guided for in the first half of the year. We fully expect to come back…to our old growth rates by the third quarter of this year. …We’re very excited about the pipeline and the order book that we have,” Samir Dhir, CEO of Sonata Software told the analysts in the post-earnings analyst call.
In the first quarter ended June 2024, the company’s international business delivered 1.3% QoQ (quarter-on-quarter) growth.
“When we guided for being a $1.5 billion company that was about two years back, that time the market scenarios were different. So, we do expect about two to four quarters delay on the original plan. But we are still very much pushing and working towards getting to the $1.5 billion with may be about two to four quarters delay on the overall run rate,” Dhir said.
In the first quarter, the revenue of the company was led by BFSI (retail banking) and TMT verticals (Microsoft Fabric).
According to HDFC Institutional Equities, the IT firm’s international IT services would be back on the growth trajectory based on healthy deal wins and a strong book-to-bill ratio of 1.24. The total contract value of the company stood at $103 million by the end of the first quarter.
“The large deal pipeline is strong with 49 large deals under pursuit. GenAI and Fabric deals are gaining traction and 50 per cent of the deals in the pipeline are from cloud and data. The company won three large deals in the quarter. The management indicated that decision-making is still slow and the aspiration of $0.5 billion in services revenue by FY26E will be delayed by 2-3 quarters,” HDFC Institutional Equities said in a report.
