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IDBI Capital Report
Sonata Software Ltd. reported subdued Q4 services revenues (down 2.4% QoQ) due to delay in large deal in healthcare. Going forward, the company expects macro challenges will lead to delay in decision making (elongated from three-six months to six-nine months) and in large deal closure. Hence, the company expect flat to positive growth in H1 FY25E and expect stronger H2 FY25E.
However, the company expects to grow above industry in FY25E. Further, subdued revenue growth in H1 FY25E will lead to flat margins in H1 FY25E and improvement in H2 FY25E.
Consequently we have downgraded our earnings per share estimates downwards for by 12% each for FY25E and FY26E. Hence, we lower our target price downwards from Rs 915 to Rs 770.
However, considering the recent fall in price we maintain Buy rating on the stock.
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