Multibagger alert: This IT stock zoomed over 200% in one year, do you own it?

Share of Sonata Software has delivered 208 per cent returns to its shareholders in the last 12 months. The share stood at Rs 287.25 on August 5, 2020. It has zoomed to Rs 884.05 today, translating into gains of 208 per cent during the period. An amount of Rs 5 lakh invested in this multibagger stock a year ago would have turned into Rs 15.38 lakh today.
 
The stock has gained 109.5 per cent since the beginning of this year. It rose 9 per cent to hit an all-time high of Rs 884.05 on BSE after the company reported good set of numbers for the quarter ended June 2021.
 
With a market capitalisation of over Rs 8,600 crore, the share of Sonata Software stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200-day moving averages.
 
According to MarketsMojo, the company has a strong ability to service debt as the company has a low Debt to EBITDA ratio of -0.72 times. Also, the company has high institutional holdings at 28.29% and their stake has increased by 1.35% over the previous quarter.
 
The technical trend has improved from Mildly Bullish on August 3, 2021, and the stock is technically in a Bullish range now and has generated 8.15 per cent return since then. Multiple factors for the stock are bullish like MACD, Bollinger Band, KST, DOW and OBV. However, it noted that the valuation is expensive right now.
 
The company reported a net profit of Rs 86.73 crore for the quarter ended June 2021. Profit in the year-ago period stood at Rs 49.92 crore. Revenue from operations grew 33 per cent to Rs 1,268.54 crore in the June-ended quarter against Rs 952.44 crore a year ago. The EPS has increased to Rs 8.35 in June 2021 from Rs 4.80 in June 2020.
 
"Our overall strategy of building digital enterprises by creating platforms through our unique PlatformationTM methodology has proven more relevant in the current context with greater reliance and investments by enterprises in digitization and automation. Our investments to create a stronger organisation in the quality of clients, relationships, and internal investments, in creating world class competencies aligned to PlatformationTM across platform engineering, cloud transformation, data analytics and Microsoft Dynamics, have created the required market impact," said Mr. Srikar Reddy, Managing Director & CEO, Sonata Software.
 
"We see the demand situation being extremely satisfactory with growth in existing accounts and new deal pipeline. In view of super high demand for talent, we have a comprehensive talent plan in place for digital focussed skills, for talent retention, creating talent in advance and expanding our delivery centres with near shore delivery centres for US and Europe. Our acquisition of Encore is promising as it gives us access to fast the growing health care provider segment and expanding our cloud footprint apart from a new delivery location in Chennai," he added.
 
Recently, the company also announced that it has signed an agreement with the shareholders of Encore IT Services Solutions Private Limited, a Chennai-based company on July 28, 2021 to acquire a 100% stake in Encore.
 
The acquisition will help Sonata expand into a new development center in Chennai, thus giving access to a wider talent pool. It will give access to 300 person technology talent pool focused on Cloud engineering, Application development and maintenance and data management and with domain expertise in healthcare pharmacy and logistics.