Sonata Software Q2 FY26 Performance Analysis & Market Reaction

Sonata Software Ltd. reported a mixed set of results for the second quarter ending September 30, 2025, leading to a 5% decline in its share price during intraday trading on November 14. Key Financial Performance (QoQ) Revenue: Consolidated revenue experienced a sharp contraction, declining 28.5% quarter-on-quarter (QoQ) to ₹2,119.3 crore from ₹2,965 crore in Q1 FY26. Profitability: Despite the revenue dip, the company showed robust bottom-line growth. EBIT (Earnings Before Interest and Taxes) grew by 9.2% QoQ to ₹146.3 crore. Consolidated Net Profit (PAT) followed suit, rising 10% QoQ to ₹120 crore from ₹109 crore in the previous quarter. Margin Expansion: The highlight of the quarter was a substantial improvement in operational efficiency. EBIT Margin expanded by 240 basis points, improving to 6.9% in Q2 compared to 4.5% in Q1. Operational Highlights & Management Commentary Management commentary focused on strategic advancements and resilience in the core business. International IT Services: The International IT Services (IITS) division reported steady progress, contributing to the 10% QoQ growth in consolidated PAT. Large Deal Wins: The company reaffirmed its focus on large deals, securing a significant new contract in the healthcare vertical with a leading US provider. AI Integration: Strategic investments in Artificial Intelligence are translating into tangible orders. AI-led engagements accounted for approximately 10% of the overall order book for the quarter. Client Traction: Sonata Information Technology (SITL) noted strong traction in the Microsoft SMC segment and continued client additions, underscoring disciplined execution despite prevailing industry headwinds. Shareholder Returns & Stock Performance Interim Dividend: The Board has declared a second interim dividend of ₹1.25 per equity share (125% on a face value of Re 1) for the financial year 2025-26. Record Date: November 21, 2025