Sonata Software Ltd. has reported a YoY 85% jump in its net profits to Rs 79.2 m on a turnover of Rs 398 m. Exports revenues contributed more than 60% to its total revenues and revenues from e-commerce has contributed to 50% of the company's total exports.
The company's operating profit margins improved to 20.9% in the current year compared to 15% in the quarter ended March 2000. In future the company's focus would be on increasing revenues from e-commerce by delivering projects to its international clients.
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Sonata has decided to spin off its Indian operations, product selling, IT consulting and business solutions into a newly formed subsidiary Sonata Information Technology Ltd. Since each of the two main business domestic and overseas have become sizable in itself and the hiving off would help investors to look at the two business distinctly.
The company has decided to for a 10:1 stock split to increase the liquidity of the stock. At the current market price of Rs 721, Sonata Software is available at a P/E of 23 times 1QFY01 annualised earnings. Given the acquisition opportunities, organic growth possibilities the company's valuations are expected to improve further.
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