Sonata Software Reports Growth in Q1 FY26 with Interim Dividend Announcement

Sonata Software's Q1 FY26 Financial Overview

Sonata Software, a prominent player in the modernization engineering sector, has announced its financial results for the first quarter of FY26, ended on June 30, 2025. The company reported a consolidated Profit After Tax (PAT) growth of 1.7% quarter-on-quarter, marking a significant yet steady improvement in its financial health. In addition to the earnings report, Sonata also declared its first interim dividend of ₹1.25 per share, a move set to benefit its shareholders amid a competitive market landscape.

Financial Highlights

Overview of Results

For Q1 FY26, Sonata Software's total consolidated revenues reached ₹2,965.2 crores, reflecting a robust 13.3% increase compared to the previous quarter. This performance was driven largely by robust growth in its Domestic Products and Services sector, which recorded revenues of ₹2,274.7 crores, signifying an impressive 18.6% quarter-on-quarter increase.

Internationally, the IT Services segment displayed resilience with revenues standing at ₹699.9 crores, although it showed a slight decrease of 0.3% from the last quarter. The company’s efforts in securing large contracts, especially in the Banking, Financial Services, and Insurance (BFSI) sectors, underscore a focused growth strategy.

Earnings and Margins

In terms of profitability, Sonata reported an EBITDA of ₹159.6 crores for the quarter, falling 7.6% compared to the previous quarter, due to varying operational costs. The PAT, however, showed resilience, increasing to ₹109.3 crores, which is a growth of 1.7% from the prior quarter, suggesting effective management of expenses and costs.

Mr. Samir Dhir, Managing Director and CEO of Sonata Software, remarked on the company's performance, noting that the revenue growth in the International IT Services, although modest at 0.6% quarter-on-quarter, signifies the company’s solid execution capabilities and industry partnerships. He highlighted that the strategic focus on healthcare and BFSI segments has seen substantial growth over the past few years, validating their diversified business strategy.

Strategic Developments

In conjunction with its earnings, Sonata also mentioned adding seven new clients during the quarter, including a notable deal focused on AI-led digital modernization valued at $73 million with a leading United States-based Telecom, Media, and Technology (TMT) company. This aligns with Sonata's commitment to enhancing its portfolio in digital transformation and modernization services.

Furthermore, the company is actively strengthening its cloud and data protection service capabilities, an essential part of its service offering as more businesses look towards digitalization in light of recent market trends.

Dividend Announcement

The board of directors' decision to declare an interim dividend of ₹1.25 per share reflects the company’s confidence in maintaining shareholder satisfaction while continuing its growth trajectory. This dividend announcement, together with the reported earnings, is expected to bolster investor confidence, particularly as Sonata navigates a challenging and rapidly evolving tech landscape.

Future Outlook

Looking ahead, Sonata Software remains optimistic about its future prospects. The company aims to continue leveraging its strategic investments in modernization to drive long-term growth. As clients increasingly require advanced digital solutions to remain competitive, Sonata is well-positioned to capitalize on these emerging opportunities through its innovative service offerings and robust infrastructure.

With a strong global presence and a reputation as a trusted partner for Fortune 500 companies, Sonata is poised to foster its growth within the modernization engineering space, focusing on delivering value through its cutting-edge technological solutions.

In summary, Sonata Software's results for Q1 FY26 showcase a blend of steady growth, sound financial management, and a forward-looking approach to capitalize on the burgeoning demand for digital transformation across various sectors.