Mid-tier IT firm Sonata Software expects the first quarter of FY25 to remain subdued with 1-3 per cent growth, as macroeconomic uncertainty continues and the business of acquired firm Quant Systems is expected to be soft, according to Jagannathan Chakravarthi, CFO, Sonata Software.

The company’s revenue in Q4 stood at ₹2,191.60 crore, with an 11.8 per cent sequential dip. Profit on a year-on-year basis dipped 3 per cent to ₹110.36 crore. Following the results, its shares have dipped 15.16 per cent in a day on exchanges.

Sonata Software’s revenue growth momentum was affected by more than expected softness in Quant Systems — its recently acquired firm — and delay in the ramp up of a specific large deal.

“We were expecting that Quant Systems will be soft in Q4, as the January to March period is a seasonal impact for them, but they were softer than what we expected. We are also working on a large deal, for which onsite deployment of employees has also been done, however, that project is being reviewed and recalibrating,” Chakravarthi told businessline. However, in the second half of the year, Quant Systems is expected to perform better.

Further, the revenue drop and deployment of employees on-site have been deterrents to margin growth. Going forward the margin performance will also be affected by plans to implement a new performance management system for employees and planned salary hikes. In the medium term Sonata Software is confident of maintaining margins in the low 20s.

Commenting on the demand environment, Chakravarthi said that while uncertainty definitely remains a factor, verticals like High-Tech have picked up and growth from BFSI and hospitality too is expected to bounce back.

The company also said that it will continue to hire in FY25. Last year, it made offers to 650 students and honoured the offers. For FY25 too, it expects hiring in the similar range, more prominently in the second half of the year.

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