Sonata Software Has The Expertise To Grow Into Big League

New Managing Director

New Managing Director Srikar Reddy
New Managing Director Srikar Reddy | Source

Sonata Software - Latest financial results

(in Cr.)
Dec-11
Sep-11
FY10-11
Revenue
57.03
54.57
253.04
Net Profit
2.67
3.36
61.86
EPS
0.25
0.32
5.88
Cash EPS
0.51
0.59
6.79
OPM %
11.73
11.4
29.19
NPM %
4.67
6.15
24.45
Sonata Software - Latest financial results

Selection By World Economic Forum


Average Results

Sonata Software has produced average results for the quarter ended 31.12.11 compared to the previous quarter. While revenue increased marginally, net profit declined steeply (see the tables). Net margin has also declined. The shares of Sonata Software are traded in the Indian stock markets at Rs.17.95 (BSE 31.03.12). The face value of the company’s shares is Rs.1. The highest and the lowest price recorded by the shares of Sonata Software in the last one year are Rs.47.20 and Rs.17.50 respectively. In other words, the company’s shares are being traded at its lowest level in the last one year. Quantity traded 1,84,485 deliverable quantity (gross across client level) 1,33,439 and % of Deliverable Quantity to Traded Quantity is 72.33 %. This high percentage suggests that the share price may rise a little in the short term.

New Managing Director

Sonata Software is reported to have sustained a net loss of Rs.6.87 crore for the Q3, according to the newspaper reports. But in the BSE website, it has been reported that the company incurred a net profit of Rs.2.67 crore. Which is true? Investors should be cautious in case of such discrepancies. They should take it that the company has reported a net loss of Rs.6.87 crore. Similarly revenue for the company has been reported in the newspapers as Rs.526.25 crore whereas in the BSE website it is shown as Rs.57.03 crore. The previous quarter revenue is shown in the newspapers as Rs.384.92 crore whereas in the BSE website it is shown as Rs.54.57 crore. Sonata Software has changed its Managing Director after the results. The old Managing Director Sanjay Viswanathan has been replaced by the new Managing Director Srikar Reddy. Srikar Reddy joined Sonata Software in 1986. Sanjay Viswanathan had become Managing Director of Sonata Software only in September last year. Sanjay Viswanathan’s resignation may be connected to the poor performance of the company in the last few quarters as its share price also indicates.

Kakalia Should Not Be Replaced

Sonata Software is a mid-tier IT company from Bangalore. It has appointed Sohrab Kakalia as the Chief Sales & Commercial Officer to lead account management and new business sales at the international level. His role is also to take care of the global marketing function and to select existing key accounts. Sonata Software is sensing growth opportunities in Europe, North America and Middle East. But the appointment of Sohrab Kakalia was made by the previous Managing Director Sanjay Viswanathan. Whether the new Managing Director Srikar Reddy will continue with this appointment or effect a change is not known. Kakalia has a wide experience as he had worked in Infosys earlier and led the technology consulting practice at the international level. His experience covers digital strategy (commerce, portal and security), architecture, high performance computing, retail and analytics. Before joining Infosys, Kakalia worked in the hardware area in PSI Data Systems. He worked as VLSI engineer in automation & process control. He quickly constructed businesses around gas & oil, telecom and satellite & space. With this kind of experience, Kakalia is an asset for Sonata Software and he should not be disturbed from his present assignment. If he is disturbed, the loss is for Sonata Software and not for Kakalia.

Selection By World Economic Forum

Sonata Software has been picked by the World Economic Forum to join the community of Global Growth Companies (GGC). This is a prestigious selection for Sonata Software. GGC was initiated in 2007 to engage high-growth and dynamic firms with the potential industry leaders to become the driving force of social and economic change. At the end of last year, 333 firms from more than 60 nations were part of GGC. Membership in GGC offers privileges like opportunities for interaction & exchange of expertise with other members including foundation members, industry partners, young global leaders, technology pioneers, cultural & spiritual leaders and media leaders. But it is not clear whether Sonata Software will derive any financial benefits like increase in net profit and revenue because of this GGC membership. Shareholders are interested only in hard figures like revenue and profit and not in decorative memberships in clubs and societies.

Strong Expertise In ERP Implementation

Sonata Software is making efforts to enter Turkey, Qatar and China in the next two quarters. The plan is not only to make use of the IT opportunities in these countries but also to use the opportunity as a springboard to leap into the region as a whole. Qatar is spending a whopping $250 billion to tone up its infrastructural facilities. It is spending around $3 billion for the software alone. Here Sonata Software’s partnership with Microsoft, Oracle and SAP will help it secure an entry into the lucrative IT software sector in Qatar. Qatar Airways is already a client of Sonata Software. The company will also work with Qatar Royal Family to win contracts. Already Sonata Software has begun its operations in Qatar in the name of Sonata Software (Qatar) WLL. It is a joint venture with Mohammad Nasser Abdullah Al MISNAD. The company will provide business-focussed solutions and technologies to the Qatar enterprises. Sonata Software has a strong expertise in ERP implementation. With this expertise, Sonata Software can upgrade and do support initiatives on Oracle eBusiness Suite, Microsoft Dynamics AX and SAP.

Obama Facing A Tough Challenge

Obama Facing A Tough Challenge
Obama Facing A Tough Challenge | Source
Sonata Software - share price movement in BSE
Sonata Software - share price movement in BSE | Source

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Sonata Software - share price trends

 
 
 
Weekly H/L
19.95
17.5
Monthly H/L
22.9
17.5
52 Weeks H/L
49.2
17.5
 
( 9 Jun 11 )
( 28 Mar 12 )
Delivery / Var+ELM %
62.8
14.02
Sonata Software - share price trends

Sonata Software Has The Expertise To Grow Into Big League


Strong Relations In Qatar And Gulf

The joint venture will be operating from Doha in Qatar and will focus on delivering services around e-Commerce, ERP implementation & support, BI, collaboration solutions, cloud solutions and mobility to enterprises in the region. Sonata Software is particularly concentrating in forging partnerships and building expertise in mobility and cloud related technology. Sonata Software has multi-mobile platform expertise and product engineering to accomplish these tasks. Sonata Software will be offering these high-end services to firms in Qatar in order to stabilise their critical business functions. Already Sonata Software has embedded 50 professionals in Qatar Airways. Sonata Software has collaborated and worked with sixteen other enterprises in the Gulf region.

Turkey Is Growing More Than European Union

A foothold in Turkey will enable Sonata Software to gain markets in North Africa and the Balkans. Turkey was once called the sick man of Europe. But today it has a robust economy and is doing better than the European Union. See the link for knowing more about Turkey and its economic strength. There are many Turkish immigrants in Germany and so it may open the path for Sonata Software into Germany also. Turkey is a near-shore and low-cost centre for Sonata Software to gain entry into the lucrative German market where the margins are high. Sonata Software is looking forward for a local partner in Turkey to commence its operations. There is an opportunity worth $2 billion to be tapped in Turkey alone and $10 billion in the surrounding region.

Chinese Market

Sonata Software is also interested to tap $10 billion market opportunity in China. Here again it is scouting for a local partner. By using North Eastern China, Sonata Software plans to enter another lucrative market namely Japan. Sonata Software is also looking for suitable acquisitions in these countries.

Obama Facing A Tough Challenge

Sonata Software’s intention to capture markets in Turkey, Qatar and China is sensible. Its main outsourcing market European Union is facing an acute debt crisis. Spain, Italy, Portugal, Greece and Ireland are already in trouble with their huge debt. The debt of Italy alone is much more than the combined debt of Portugal, Spain, Ireland and Greece. Credit rating of many European Union nations has been downgraded by rating agencies like Moody. European client are holding back their spending in IT technology for another one or two years. European clients are also delaying their decision to go for new projects. Global economic growth is very much restricted now. Sonata Software earns more than 50% of its revenue from European Union. There is an economic slowdown in USA which is Sonata Software’s another major outsourcing market. Moreover the US President Obama wants to deny opportunities to Indian companies like Sonata Software for outsourcing as he is facing a tough electoral challenge from the Republican Party for retaining his post.

Car rental software

Sometimes back Sonata Software launched a car rental management system called MilEdge. The software was a PCI DSS (Payment Card Industry Data Security Standard0 compliant web-based solution targeted at auto-leasing companies. Sonata Software implanted this software for the Arenco group. Arenco group has a fleet of more than 15000 vehicles in UAE. As travellers are rising worldwide, the future of car rental industry is also bright. At present Sonata Software is working to offer MilEdge on a SaaS (Software as a Service) model.

Strong company

Sonata Software has the expertise to grow into a big league. Its problems now are temporary because of the economic conditions prevailing in USA and European Union. This is a passing phase. Better times are ahead of the company. Investors can buy the shares of Sonata Software at the current low price for medium and long term holding for decent returns.

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Comments 2 comments

homesteadbound profile image

homesteadbound 4 years ago from Texas


ramkimeena profile image

ramkimeena 4 years ago from India Author

Dear homesteadbound,

I thank you for your valuable comments. Actually my article is the original article. The website you quote has copied my article word by word which is illegal and rank plagiarism. This can be proved by comparing the dates of the two websites. My website will have the earlier date. But if the dates are the same, then the time of publication can be compared which will reveal that my article was the first one that was published. But I do not know how to compare the date and time of the two websites as I am not a web expert. If some software expert does this and write the truth, I will be very happy.

By the way, I have many years of experience in financial journalism. When I write about a company, I gather all the facts independently and analyze them. Then I use my own words and write the article. Copying from some other website is not my style and I cannot even think of it in my mind. Anyway thank you for pointing out that my article has appeared in some other website.

Best wishes to you,

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