Sonata Software

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Topic: Sonata Software

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Monkey
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Joined: 21/Aug/2009
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Topic: Sonata Software
Posted: 30/Oct/2009 at 10:39pm

Originally posted by smartcat

.......... keep an eye on sonata software - it is new wine in an old bottle.

Smartcatjee,

I am not clear on what your above wordings mean. It would be helpful if you clarify further.

I have looked at some data for this company (Source - India infoline)

	Mar-04	Mar-05	Mar-06	Mar-07	Mar-08	Mar-09
Sales (Rs. Crore)	69.68	97.01	148.67	185.83	198.82	243.58
Net profit (Rs. Crores)	10.64	15.87	24.00	35.13	36.68	53.37
EPS (Rs.)	1.02	1.47	0.6	3.17	3.30	4.82
Dividend (Rs. per share)	0.5	0.65	1	1.1	1.1	1.5
Book value (Rs per share)	14.48	15.30	14.90	16.97	18.94	21.28
ROCE (%)	N/A	11.7	18.2	21	21	26.9
RONW (%)	N/A	10.5	15.1	21	19.4	25.2

The data looks reasonably OK. Company is debt free company. At today's price of 33.65 and with Mar-09 EPS of 4.82, P/E works out to be about 7. dividend yield is about 4.5% which is quite good. Company has already paid Rs.0.9 dividend this year.

On above account, it looks good, especially with price coming down. I do not have any idea on the business. However, I think this can be explored with inputs from forum members.

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sudhakarb
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Joined: 28/Jun/2008
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Posted: 30/Oct/2009 at 10:57pm

Buy call on sonata from PPFAS

http://www.ppfas.com/pdf-docs/research/week-reports/2009/wr261009.pdf

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ab170809
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Joined: 30/Oct/2009
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Posted: 30/Oct/2009 at 11:02pm

Following are some of the concerns / observations:

1. Consolidated Sonata Software consists of three main subsidiaries - SSL (20% Rev; 70% PAT), SITL (50% Rev; 10% PAT), and TUI (30% Rev; 20% PAT).

2. Out of the above 3, only SSL is like a typical Indian IT Company. SITL are distributors of Software Products of other vendors and is a very thin margin business (PATM 1.3%). Germany based TUI is 50.1% owned by Sonata and is a low margin, low growth business.

3. Overall performance of the Company was not at all impressive before FY06. It started improving only from FY06 onwards. Not sure how sustainable it is.

4. Sundry debtors, at about 2.6 times PBT, is very high.

5. For FY09, top 4 clients accounted for 55% of total revenues and top 2 clients accounted for 30% of receivables.

6. Unfunded Gratuity obligation pertaining to TUI InfoTec GmbH, Germany amounts to about Rs 70 cr. This, together with SSL's disputed tax liability of Rs 38 cr amounts to almost an entire year's profits.

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smartcat
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Joined: 29/Mar/2007
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Posted: 30/Oct/2009 at 11:34pm

All financial websites are carrying only standalone numbers. They had cons sales of over Rs. 1600 cr in FY09.

Will post later.. am travelling..

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hit2710
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Joined: 15/Jun/2009
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Posted: 30/Oct/2009 at 12:31pm

Sonata has got exclusive rights to all software business of TUI group of Germany (which is a big business group if media reports are to be believed) for another couple of years and till then there is expectation of more business being generated through cross contacts.

11% of all time high of Sonata software is at around 32-33. Earlier it had given a good bounce upto 65-67 after consolidating above 32.

Looks like a low risk buy. Although it might take a lot of time to make a significant move.

Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

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dilip.r
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Joined: 15/May/2010
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Posted: 10/Nov/2010 at 1:27pm

MUMBAI: The promoters of mid-size IT firm Sonata Software are in talks to sell their stake in the firm, at least three people with direct knowledge of the matter said. The Rajan Raheja group and Bhupati Investments Finance, promoters of the firm, have appointed KPMG to manage the process, they said.

Last week, the promoters of another mid-size IT firm, Kale Consultants, sold their stake to European outsourcing provider Accelya. Kale and Sonata Software, like most small and medium size IT providers today, face challenges of growth and profitability.

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dilip.r
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Posted: 10/Nov/2010 at 1:28pm

Based on the valuation at which the Kale Consultants transaction was done, a portfolio manager, who holds shares of Sonata, said he anticipated Sonata would attract a valuation of Rs 1,000 crore - Rs 1,100 crore. “No IT company has been sold at less than ten times the profit after tax,” he said, requesting anonymity. Sonata has cash of Rs 163 crore on its books.

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dilip.r
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Posted: 10/Nov/2010 at 1:29pm

in talks with three to four players for the same. MphasiS, CDC Global and Oracle Fin Serv are the most likely contenders for the stake

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