Buy, Sell Or Hold: Sonata Software Soars Nearly 500% In Five Years, Drops 30% YTD — What's The Next Move?

Sonata Software Ltd. has delivered a whopping 468.02% return over five years, though it has hit a speed bump in 2025, down 30.89% year-to-date. 

According to IDBI Capital, Sonata Software Ltd. underperformed with a 5% quarter-on-quarter decline, primarily due to sustained weakness in the Quant segment, a full-quarter impact of a client ramp-down in telecom, media and technology, along with a larger-than-expected impact of ramp-downs that is likely to continue in the first quarter of fiscal year 2026 —though with a more subdued environment.

Management views the second quarter of fiscal year 2026 as an inflection point, projecting a recovery driven by robust growth in healthcare and banking and financial services, and targeting a $250 million run-rate over the next three to five years. This is supported by large deal ramp-ups in telecom, media and technology and banking and financial services, though headwinds from elongated deal cycles are expected to continue in retail and manufacturing verticals.

Long-term growth levers include a sharper focus on large-deal wins—highlighted by a 1.25x book-to-bill ratio in the fourth quarter—and strategic scaling via artificial intelligence, talent, and frontline sales.

Retaining a constructive outlook, IDBI Capital reiterated a 'Buy' rating on the stock, citing the recent price correction, and valued Sonata Software at 19 times fiscal year 2027 estimated earnings per share, with a revised target price of Rs 465.

On May 27, Sonata announced a strategic tie-up with Qualtrics to elevate the customer experience game for global enterprises. This partnership combines Qualtrics’ cutting-edge XM for Customer Experience™ suite with Sonata’s tech muscle and field-proven consulting prowess—creating a full-stack solution that promises to take customer satisfaction from good to mind-blowing.

A week before that, on May 20, Sonata launched AgentBridge, a powerful platform that turns enterprises into AI-powered dynamos. AgentBridge helps companies build and deploy AI agents across business functions, cutting through the mess of siloed tools and scattered initiatives. Think of it as the command centre for your digital army—complete with robust security and compliance baked right in.

So, while Sonata’s returns have wowed in the long run, it’s in the middle of a reset phase this year. But with these recent AI and CX bets, it’s clear that Sonata isn’t playing for today—it’s setting the stage for a much bigger tomorrow.

Shares of Sonata Software has fallen 12.3% in the last 12 months and 30.89% on a year-to-date basis.

Nine out of the 10 analysts tracking Sonata Software have a 'buy' rating on the stock and one recommend a 'hold', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 456.90, implying a downside of 24% from the last regular trading price.