Sonata Software
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2494
Printed Date: 21/Apr/2025 at 3:06pm
Topic: Sonata Software
Posted By: Monkey
Subject: Sonata Software
Date 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.
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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)
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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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Replies:
Posted By: sudhakarb
Date Posted: 30/Oct/2009 at 10:57pm
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Buy call on sonata from PPFAS
http://www.ppfas.com/pdf-docs/research/week-reports/2009/wr261009.pdf - http://www.ppfas.com/pdf-docs/research/week-reports/2009/wr261009.pdf
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Posted By: ab170809
Date Posted: 30/Oct/2009 at 11:02pm
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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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Posted By: smartcat
Date 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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Posted By: hit2710
Date 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.
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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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Posted By: dilip.r
Date Posted: 10/Nov/2010 at 1:27pm
MUMBAI: The promoters of mid-size IT firm http://economictimes.indiatimes.com/sonata-software/stocks/companyid-4558.cms - 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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Posted By: dilip.r
Date Posted: 10/Nov/2010 at 1:28pm
Based on the valuation at which the http://economictimes.indiatimes.com/kale-consultants/stocks/companyid-4342.cms - 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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Posted By: dilip.r
Date Posted: 10/Nov/2010 at 1:29pm
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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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Posted By: dilip.r
Date Posted: 10/Nov/2010 at 1:33pm
HCL, Oracle Fin Serv final bidders for Sonata: Sources
Published on Tue, Nov 09, 2010 at 14:02
http://www.moneycontrol.com/india/stockpricequote/computers-software-mediumsmall/sonata-software/SS42 - Sonata Software promoters are finally getting buyers for their stake sale. http://www.moneycontrol.com/india/stockpricequote/computers-hardware/hcl-infosystems/HCL - HCL Infosystems and http://www.moneycontrol.com/india/stockpricequote/computers-software/oracle-financial-services-software/OFS01 - Oracle Financial Services are among the final bidders for Sonata’s promoter stake sale, reports CNBC-TV18's Kritika Saxena quoting sources.
It is learnt that among the two, HCL Infosystems is likely to be frontrunner for the majority stake buy in Sonata.
Sources add that both the companies may have offered premium to current price for Sonata’s acquisition.
The promoters of Sonata Software who currently hold 45.14% stake are likely to exit the company. However, the management has refused to comment as per policy
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Posted By: dilip.r
Date Posted: 10/Nov/2010 at 10:15am
About Sonata Software Limited
Sonata Software ( http://www.sonata-software.com - www.sonata-software.com ), headquartered in Bangalore, India, is a leading IT consulting and
services company. Sonata' s customers are located across the US, Europe, Middle East and the Asia-Pacific region.
Its key business segments include Product Engineering (ISV), Enterprise IT and Travel, Transportation and Logistics.
As per the industry rankings released by NASSCOM for FY 2009-10, Sonata Software figured among the Top 20 IT
Software Services Exporters in India for the third consecutive year. Sonata has been ranked among Top 10 R&D
Services players globally by Zinnov Management Consulting Pvt. Ltd. Zinnov has rated Sonata 6th in the Software
Products segment.
Sonata’ s subsidiaries include (1) TUI InfoTec – Sonata’ s J oint Venture with TUI, Europe’ s largest tourism group, (2)
Sonata North America Inc (formerly Offshore Digital Services Inc) – Sonata’ s arm in the US, which provides
development and consulting services to clients, using an Onsite-Offshore Delivery Model, (3) Sonata Software FZ LLC
– Sonata’ s fully-owned subsidiary that provides value-based IT solutions to customers in the Middle East and (4)
Sonata Information Technology Limited, which is a premier software services and product distribution company with
India-focused business operation
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Posted By: dilip.r
Date Posted: 10/Nov/2010 at 10:17am
Highlights :
Sonata Software Ltd. – Cons olidated
- Rev enu e for th e q u arter at Rs. 391 .14 Cr ( Rs.3 4 7 .3 3 Cr ) u p 1 3 % YoY
- Net p rofi t for th e q u arter at Rs.2 5 .0 4 Cr ( Rs. 2 1 .3 5 Cr ) u p 1 7 % YoY
- Earni ng s p er sh are ( Annu al i z ed ) for th e q u arter at Rs. 9 .53 ( Rs. 8 .1 2 ) u p 1 7 % YoY
- RONW ( Annu al i sed ) for th e q u arter at 2 6 %
- ROCE ( Annu al i sed ) for th e q u arter at 2 5 %
- Consol i d ated Cash Reserv es : Rs.1 5 6 .0 4 Cr ( Rs.7 2 .4 7 Cr
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Posted By: anishc
Date Posted: 11/Jul/2011 at 7:46pm
Has anyone heard of renewed talk regarding the Sonata sale?
Some relevant numbers:
Mcap - Rs.440crs
Average closing price of last 6 months = Rs.40 (yahoo fin)
Debt free
Cash reserves of Rs. 281crs
Year 2007 2008 2009 2010 2011
Sales 185.83 198.82 243.58 236.09 262
EPS 3.34 3.49 5.07 5.72 5.88
Promoters Shareholding - 45.41%
No. of employees - 2883
Recent precedent is the Igate-Patni deal.
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anish
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Posted By: unknown
Date Posted: 13/Jul/2011 at 4:14pm
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Company had Contingent Liability of 250 crores, otherwise this stock is very interesting.
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Posted By: anishc
Date Posted: 13/Jul/2011 at 5:56pm
Is this the taxation related litigation that you are referring to?
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anish
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Posted By: unknown
Date Posted: 20/Jul/2011 at 4:29pm
Yes , it was related to tax litigation. After that I stopped following.
I don't know the latest updates.
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Posted By: shontou
Date Posted: 26/Sep/2011 at 9:30am
Conference Call
Sonata Software
New/start up projects are getting delayed, no pressure seen on pricing
Sonata Software held a conference call on September 26, 2011 to discuss corporate strategy and growth road map and introduce Mr. Sanjay Vishwanathan, CEO and MD of the Company. Mr. Snajay and Mr. Srikar Reddy, Deputy MD and COO addressed the call along with other members of senior management.
Sanjay¡¯s core expertise is to create enduring value in Tech and Outsourcing across IT / BPO. He brings deep insight in IT / BPO sector on a platform of global operations and sales. In his earlier roles, he has served as officer and group executive both client side and service provider©\side that includes Reed Elsevier Plc (Chief Outsourcing and Offshoring Officer), GE (Vice President ©\ Genpact), Infosys (Head ¨C Global Strategic Relationships and Public Sector), and 3M (Brand Manager, S & M Manager).
The main priorities under Sanjay are to grow and transform Joint venture with TUI Infotec, build sales engine in Europe and North America and grow India business.
Euro zone debt crisis and currency are major headwinds.
India and China are the two markets of growth and management is evaluating China plans but is careful being a late entrant.
International business is said to continue to witness flatness and HR compensation will impact margins. India business will take few quarters to see impact of transformation initiatives.
44% of revenues which come from existing business has good pipeline.
In the wake of recent global crisis, new/start up projects are getting delayed.
On the forex front, the company remains hedged for 18 months and the current realization is Rs 47.5/$.
There is no pressure seen on pricing.
TUI Infotec Joint Venture, India business and some service verticals like Remote Infra, ADM and Testing are growth catalysts.
Clients continue to adopt wait and watch policy but focus remains on growth rather than cost, being cash rich and introducing new products and services.
The management would like EBITDA margins of 20-22% in International business and back to 10% in TUI Infotec.
Cash of Rs 160 crore includes Rs 40-45 crore of investment by TUI Infotec JV.
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Every day, self-proclaimed stock market "experts" tell us why the market just went up or down, as if they really knew. So where were they yesterday?
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