Sonata Software Share Price Tumbles On Lower Q4 Revenue Expectation

Share price of Sonata Software Ltd. tumbled on Thursday, after the company released a report stating that its largest client expects a cut in final quarter revenue.

Intraday, the stock plunged as much as 14% to Rs 288 per share.

Sonata Software's revenue from international revenue stood at $87 million during the third quarter. In constant currency terms, it grew 2.8% QoQ and 3.9% YoY. International revenue accounted for 25% of total revenue during the period. The company's largest client is Microsoft.

As per management's guidance for the fourth quarter, the company is set for a sequential revenue decline of 2.5% to 3.5%. The company is also considering the full-quarter impact of an unplanned ramp down and a one-time discount at a large TMT client and quant seasonality.

Brokerage firm Deven Choksey Research has an 'accumulate' call on the counter, with a target price of Rs 517, indicating a 68% potential upside for the stock.

Shares of Sonata Software plunged as much as 14.04% to Rs 288 apiece, the lowest level since April 7. They pared losses to trade 7.46% lower at Rs 310.05 apiece, as of 10:37 a.m. This compares to a 0.15% decline in the NSE Nifty 50.

The stock has fallen 47.95% on a year-to-date basis, and 55.49% in the last 12 months. Total traded volume so far in the day stood at 7.4 times its 30-day average. The relative strength index was at 34.62.

Out of 11 analysts tracking the company, nine maintain a 'buy' rating, and two recommend a 'hold', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 73.2%.