Sonata Software Q2 Profits Soar 13.5%! AI Boosts Growth, But Revenue Slows - Investors Must See This!

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Updated on 13 Nov 2025, 02:21 pm

Sonata Software announced its financial results for the second quarter ending September 30, 2025. The company posted a net profit of ₹120.9 crore, marking a healthy 13.5% increase compared to ₹106.49 crore in the same quarter last year. Sequentially, net profit saw a 10% rise from ₹109 crore in the June quarter.

Revenue from operations stood at ₹2,119.3 crore, a 2.3% decrease year-on-year and a significant 28.5% dip quarter-on-quarter. This sequential decline was primarily driven by a 38.8% drop in domestic product and services revenue, which fell to ₹1391.3 crore. In contrast, revenue from international IT services showed resilience, growing 4.3% quarter-on-quarter to ₹730.3 crore.

Earnings Before Interest and Tax (EBIT) increased by 9.2% from the previous quarter to ₹146.3 crore, and operating margins improved substantially by 240 basis points to 6.9%, up from 4.5% a year ago.

The company also declared a second interim dividend of ₹1.25 per equity share for FY2025-26, with a record date of November 21, 2025, and payment starting from December 3.

Samir Dhir, MD & CEO of Sonata Software, stated that the company secured a large deal in the healthcare vertical and emphasized that investments in artificial intelligence (AI) are yielding results, with AI-led orders forming approximately 10% of the total order book for the quarter.

Impact: This news could lead to a mixed reaction. The strong net profit growth, improved margins, and dividend payout are positive catalysts. The CEO's emphasis on securing large deals, particularly in healthcare, and the significant contribution from AI-led orders (10% of the order book) suggest future growth potential. However, the noticeable decline in overall revenue, especially from domestic operations, might temper investor enthusiasm. The stock performance will likely depend on how investors weigh the profit growth and AI traction against the revenue contraction. Impact Rating: 6/10

Difficult Terms: * **Year-on-year (YoY)**: A comparison of financial metrics over the same period in consecutive years (e.g., Q2 FY25 vs. Q2 FY24). * **Quarter-on-quarter (QoQ)**: A comparison of financial metrics over consecutive quarters within the same fiscal year (e.g., Q2 FY25 vs. Q1 FY25). * **Revenue from operations**: The total income generated from the company's core business activities before deducting any expenses. * **Earnings Before Interest and Tax (EBIT)**: A measure of a company's operating profit, excluding interest expenses and income taxes. * **Basis points**: A unit equal to one-hundredth of one percent (0.01%). 240 basis points is equal to 2.4%. * **Interim dividend**: A dividend paid out to shareholders during the fiscal year, before the company's annual general meeting and final dividend declaration. * **Record date**: The date on which a shareholder must be registered on the company's books to be eligible to receive the declared dividend.