Sonata Software shares plunge 19% on Q3 margin miss 

Sonata Software’s shares tumbled up to 19 per cent to hit a 52-week low of ₹446.10 on February 7, 2025, following disappointing third-quarter margins despite beating revenue estimates. The stock was trading at ₹483.95, down 12.26 per cent at 11.50 AM on the NSE.

The IT services company reported Q3 revenue of $87 million, showing 2.8 per cent quarter-on-quarter growth and 3.9 per cent year-on-year growth. However, EBITDA declined 7.7 per cent sequentially to ₹164 crore, with margins contracting 240 basis points to 5.8 per cent.

The margin decline was attributed to multiple factors, including an unplanned ramp-down of a large TMT client, one-time client discount, salary hikes, and employee settlement costs. Management has projected a 2.5-3.5 per cent sequential revenue decline in Q4 due to these challenges.

Among verticals, BFSI showed strong growth at 40.2 per cent QoQ, followed by Healthcare & Life Sciences at 13.1 per cent. However, TMT and RMD segments declined by 6.8 per cent and 17.8 per cent respectively. The company secured two large deals in Q3, with total order bookings of $114 million and a book-to-bill ratio of 1.2x in International IT Services.

Management expects margin recovery to begin in Q4, with full impact visibility expected by Q1 of the next fiscal year.