SONATSOFTW - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.2
| Stock Code | SONATSOFTW | Market Cap | 7,152 Cr. | Current Price | 255 ₹ | High / Low | 464 ₹ |
| Stock P/E | 29.2 | Book Value | 28.6 ₹ | Dividend Yield | 1.73 % | ROCE | 30.6 % |
| ROE | 28.4 % | Face Value | 1.00 ₹ | DMA 50 | 263 ₹ | DMA 200 | 330 ₹ |
| Chg in FII Hold | -0.05 % | Chg in DII Hold | -0.75 % | PAT Qtr | 57.7 Cr. | PAT Prev Qtr | 147 Cr. |
| RSI | 49.5 | MACD | 3.20 | Volume | 7,25,566 | Avg Vol 1Wk | 5,95,186 |
| Low price | 207 ₹ | High price | 464 ₹ | PEG Ratio | -9.44 | Debt to equity | 0.16 |
| 52w Index | 18.6 % | Qtr Profit Var | 874 % | EPS | 7.86 ₹ | Industry PE | 21.6 |
📊 SONATSOFTW shows strong efficiency metrics with ROCE (30.6%) and ROE (28.4%), reflecting excellent capital utilization. The company maintains a healthy balance sheet with low debt-to-equity (0.16) and EPS of ₹7.86, supporting earnings visibility. Dividend yield of 1.73% adds shareholder value. However, profitability has weakened sharply (PAT ₹147 Cr. → ₹57.7 Cr. QoQ), and valuations are stretched with P/E (29.2) compared to industry average (21.6). PEG ratio (-9.44) highlights poor growth prospects relative to valuation. Current price ₹255 is near DMA 50 (₹263) but below DMA 200 (₹330), suggesting medium-term weakness. Entry zone is attractive near ₹240–255 for accumulation.
💡 Long-term investors should hold cautiously with a 2–3 year horizon, monitoring profitability trends. Exit strategy: partial profit booking near ₹280–300 or full exit if earnings continue to decline and ROE falls below 25%.
Positive
- 📈 Strong ROCE (30.6%) and ROE (28.4%).
- 💰 Dividend yield of 1.73% provides passive income.
- 📊 EPS of ₹7.86 supports earnings visibility.
Limitation
- ⚠️ PAT declined sharply (₹147 Cr. → ₹57.7 Cr.).
- 📉 High P/E (29.2 vs industry 21.6) indicates overvaluation.
- 📊 Negative PEG ratio (-9.44) reflects poor growth efficiency.
Company Negative News
- 📉 FII holding decreased (-0.05%), showing reduced foreign investor confidence.
- 📊 DII holding decreased (-0.75%), reflecting domestic caution.
Company Positive News
- 📈 Quarterly profit variation (+874%) highlights volatility but potential for recovery.
- 📊 Technicals: RSI at 49.5 and MACD positive (3.20), indicating neutral-to-bullish momentum.
Industry
- 💻 Industry PE at 21.6 is lower than SONATSOFTW’s 29.2, suggesting relative overvaluation.
- 📉 IT services sector is cyclical, tied to global demand, outsourcing trends, and digital transformation projects.
Conclusion
⚖️ SONATSOFTW is a moderately strong candidate for medium-term investment with excellent ROE/ROCE and decent dividend yield, but weak PAT and negative PEG ratio limit long-term potential. Ideal entry is near ₹240–255. Exit near ₹280–300 or on further deterioration of earnings.
This structured HTML report captures SONATSOFTW’s fundamentals, valuation risks, and sector context with clear entry/exit guidance. Would you like me to extend this into a peer benchmarking overlay against Infosys, TCS, and HCL Tech to highlight stronger alternatives in the IT services sector?