Sunday, July 4, 2021

Sonata Software Ltd (532221) – Low Code Solutions Provider

Sonata Software Ltd (532221) closes   at 752.60 with  a  Fall  of   -0.40%   on    02-July-2021  with formation of  a  Small Red Candle    on Daily  Price Chart.

About the Company : Sonata Software Limited is an information technology (IT) services and solutions company. The Company's primary segments are based on geographical areas, and include Domestic (India) and International (Rest of the world). Its secondary segment comprises business segments, products and services. It provides solutions for travel, retail and distribution, and software product companies by integrating technologies, such as Omni-channel commerce, mobility, analytics, cloud and enterprise resource planning. Its operations include software development, technical services and product marketing. It is involved in the provision of IT services and solutions to its customers, and distribution of software products in India. Its services include application lifecycle services, which deliver application management with facilities, such as application development and application migration; retail IT services, such as Dynamics AX retail, and technology infrastructure services

Sector Update :  Low Code Solutions Provider & SaaS are expected to Grow at +20% by 2024.

Financials : Sonata Software Ltd has posted Net Sales / Revenue   of 4158.30 Cr & Net Profit of  230.10 Cr in FY2021 and expected to post Net Sales / Revenue   of 5050.80 Cr & Net Profit of 337.90 Cr in FY2022 & Net Sales / Revenue   of 5549.20 Cr & Net Profit of 385.60 Cr in FY2023 .

EPS will be improved from 25.58 in FY2021 to 39.58 in FY2023 & Return of Equity (RoE) from 25.8% to 39.20 during the same period..

Valuations  : The Company is now Trading at X 2..10  of its  valuations of its FY2021 earnings with ~110% Premium and X1.42 of its FY2022 earnings with ~42% Premium & X1.25 of its FY2023 earnings with ~25%  premium .

Margin of Safety (1Yr Bond Yield: Value>1 ) is now  0.70   which  makes is attractive after ~30% dip in price. The  Equity Value Per Share ( Enterprise Value Method ) is  689.00

If We factor its FY2023 earnings/valuations, its Price arrives at 1270.

Market Sentiment   Update : Our Nifty Next Indictor (NNI) is now at 117.94 as on 02-July-2021, which suggests the Return on Equity Investment will be 2.30% in next 6Month; 7.7% in 12M & 0.30%  in 24M( Based on Historical data).

Disclaimer : We are / may going to take exposure shortly.

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