Anand Rathi is bullish on Sonata Software has recommended buy rating on the stock with a target price of Rs 330 in its research report dated August 11, 2020.
Anand Rathi 's research report on Sonata Software
Hurt by the steep fall in its Travel vertical (4% of revenue, down 85% q/q, 87% y/y), Sonata’s$36.5m Q1 revenue slid18% q/q and y/y. Cost optimisation and an 8.2%EBITDA margin (down only 211bps q/q, 205bps y/y), helped arrest the profit decline to 26% y/y. Sonata believes that Q1 was a bottoming-out quarter and that steady growth would ensue from Q2 FY21. We trimour FY21e/22e revenue but raise FY21/22e profit 7/10% on higher margins and currency.
Outlook
We raise our target multiple to 12.5x FY22e EPS (11x earlier) resulting in a higher target of `330 (`270 earlier) and upgrade our rating to a Buy.
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