⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
SONATSOFTW - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.5
| Stock Code | SONATSOFTW | Market Cap | 6,736 Cr. | Current Price | 240 ₹ | High / Low | 464 ₹ |
| Stock P/E | 27.5 | Book Value | 28.6 ₹ | Dividend Yield | 1.83 % | ROCE | 30.6 % |
| ROE | 28.4 % | Face Value | 1.00 ₹ | DMA 50 | 287 ₹ | DMA 200 | 356 ₹ |
| Chg in FII Hold | -0.06 % | Chg in DII Hold | -0.03 % | PAT Qtr | 57.7 Cr. | PAT Prev Qtr | 147 Cr. |
| RSI | 31.4 | MACD | -17.6 | Volume | 8,92,870 | Avg Vol 1Wk | 7,11,124 |
| Low price | 229 ₹ | High price | 464 ₹ | PEG Ratio | -8.89 | Debt to equity | 0.16 |
| 52w Index | 4.77 % | Qtr Profit Var | 874 % | EPS | 7.86 ₹ | Industry PE | 20.9 |
📊 Financial Overview
- Revenue & Profit Growth: Quarterly PAT dropped from ₹147 Cr. to ₹57.7 Cr., showing weak momentum despite YoY profit variation of 874%.
- Margins: ROE at 28.4% and ROCE at 30.6% → strong efficiency.
- Debt: Debt-to-equity ratio of 0.16 → low leverage, balance sheet stable.
- Cash Flow: Supported by strong efficiency metrics but pressured by profit decline.
- Return Metrics: EPS at ₹7.86, modest earnings power.
💹 Valuation Indicators
- P/E Ratio: 27.5 vs Industry PE of 20.9 → slightly overvalued.
- P/B Ratio: Price ₹240 / Book Value ₹28.6 ≈ 8.39.
- PEG Ratio: -8.89 → negative, reflecting weak growth outlook.
- Intrinsic Value: Current valuation stretched, limited margin of safety.
🏢 Business Model & Competitive Advantage
- Operates in IT services and software solutions.
- Competitive advantage lies in strong efficiency metrics and established client base.
- Challenges include profit volatility and valuation risk.
📈 Entry Zone Recommendation
- Technicals: RSI at 31.4 (oversold), MACD negative, price below 50DMA (287) and 200DMA (356).
- Entry Zone: Attractive accumulation near ₹230–240 for long-term investors.
- Holding Guidance: Suitable for patient investors; long-term holding depends on earnings recovery and demand stability.
✅ Positive
- Strong ROE (28.4%) and ROCE (30.6%).
- Low debt-to-equity ratio (0.16).
- Dividend yield at 1.83% provides income stability.
⚠️ Limitation
- Quarterly PAT declined significantly.
- High P/B ratio (8.39).
- PEG ratio negative (-8.89), reflecting weak growth outlook.
📉 Company Negative News
- PAT dropped from ₹147 Cr. to ₹57.7 Cr.
- FII holdings decreased (-0.06%).
- DII holdings decreased (-0.03%).
- Stock corrected from ₹464 to ₹240.
📈 Company Positive News
- YoY profit variation shows strong improvement (874%).
- RSI oversold may attract value investors.
- Dividend yield at 1.83% supports investor interest.
🌐 Industry
- IT services industry benefits from digital transformation and global outsourcing demand.
- Industry PE at 20.9 indicates sector trades at lower valuations compared to SONATSOFTW.
- Global demand for software solutions supports long-term opportunities.
🔎 Conclusion
- SONATSOFTW shows strong efficiency metrics and low debt but suffers from profit volatility and high valuation.
- Valuations are stretched, limiting near-term upside.
- Best considered for long-term investors with entry near ₹230–240; holding depends on earnings recovery and demand growth.