Sonata Software Limited Just Recorded A 22% Revenue Beat: Here's What Analysts Think
The quarterly results for Sonata Software Limited (NSE:SONATSOFTW) were released last week, making it a good time to revisit its performance. Revenue of ₹33b beat expectations by an impressive 22%, while statutory earnings per share (EPS) were ₹16.74, in line with estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Sonata Software from seven analysts is for revenues of ₹114.2b in 2027. If met, it would imply a credible 3.9% increase on its revenue over the past 12 months. Per-share earnings are expected to expand 12% to ₹18.68. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹113.5b and earnings per share (EPS) of ₹18.88 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
Check out our latest analysis for Sonata Software
The analysts reconfirmed their price target of ₹326, showing that the business is executing well and in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Sonata Software, with the most bullish analyst valuing it at ₹374 and the most bearish at ₹280 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Sonata Software is an easy business to forecast or the the analysts are all using similar assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Sonata Software's revenue growth is expected to slow, with the forecast 5.2% annualised growth rate until the end of 2027 being well below the historical 17% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.7% annually. Factoring in the forecast slowdown in growth, it looks like Sonata Software is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Sonata Software analysts - going out to 2029, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Sonata Software that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.