SONATA SOFTWARE 2020-21 Annual Report Analysis

Wed, 31 Mar

SONATA SOFTWARE has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

SONATA SOFTWARE Income Statement Analysis

• Operating income during the year rose 13.0% on a year-on-year (YoY) basis.
• The company's operating profit increased by 1.8% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 9.0% in FY21 as against 10.0% in FY20.
• Depreciation charges increased by 8.3% and finance costs increased by 1.4% YoY, respectively.
• Other income declined by 52.5% YoY.
• Net profit for the year declined by 11.9% YoY.
• Net profit margins during the year declined from 7.4% in FY20 to 5.8% in FY21.

SONATA SOFTWARE Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	37,433	42,281	13.0%
Other income	Rs m	584	278	-52.5%
Total Revenues	Rs m	38,017	42,558	11.9%
Gross profit	Rs m	3,728	3,794	1.8%
Depreciation	Rs m	365	396	8.3%
Interest	Rs m	152	154	1.4%
Profit before tax	Rs m	3,795	3,521	-7.2%
Tax	Rs m	1,026	1,082	5.5%
Profit after tax	Rs m	2,769	2,440	-11.9%
Gross profit margin	%	10.0	9.0
Effective tax rate	%	27.0	30.7
Net profit margin	%	7.4	5.8

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SONATA SOFTWARE Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 9 billion as compared to Rs 8 billion in FY20, thereby witnessing an increase of 13.0%.
• Current assets rose 24% and stood at Rs 15 billion, while fixed assets rose 14% and stood at Rs 5 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 19 billion as against Rs 16 billion during FY20, thereby witnessing a growth of 21%.

SONATA SOFTWARE Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	6,668	9,032	35.4
Current Liabilities	Rs m	8,311	9,394	13.0
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	15,921	19,280	21.1
Current assets	Rs m	11,896	14,692	23.5
Fixed Assets	Rs m	4,025	4,588	14.0
Total Assets	Rs m	15,921	19,280	21.1

SONATA SOFTWARE Cash Flow Statement Analysis

• SONATA SOFTWARE's cash flow from operating activities (CFO) during FY21 stood at Rs 4 billion, an improvement of 20.1% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -1 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -621 million, an improvement of 80% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 3 billion from the Rs 2 billion net cash flows seen during FY20.

SONATA SOFTWARE Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-20	Mar-21
Cash Flow from Operating Activities	Rs m	3,686	4,426	20.1%
Cash Flow from Investing Activities	Rs m	1,391	-1,141	-
Cash Flow from Financing Activities	Rs m	-3,098	-621	-
Net Cash Flow	Rs m	1,979	2,685	35.7%

Current Valuations for SONATA SOFTWARE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 23.5, an decline from the EPS of Rs 26.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 509.4, stands at 22.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 5.9 times, while the price to sales ratio stands at 1.3 times.
• The company's price to cash flow (P/CF) ratio stood at 12.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Sales per share (Unadj.)	Rs	360.2	406.9
TTM Earnings per share	Rs	26.7	23.5
Diluted earnings per share	Rs	26.3	23.2
Price to Cash Flow	x	5.5	12.8
TTM P/E ratio	x	6.3	22.0
Price / Book Value ratio	x	4.0	4.0
Market Cap	Rs m	26,580	36,368
Dividends per share (Unadj.)	Rs	20.3	14.0

Ratio Analysis for SONATA SOFTWARE

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.6x during FY21, from 1.4x during FY20. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 23.9x during FY21, from 26.0x during FY20. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company declined and down at 27.0% during FY21, from 41.5% during FY21. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company declined and down at 40.7% during FY21, from 59.2% during FY20. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company declined and down at 13.5% during FY21, from 18.3% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Current ratio	x	1.4	1.6
Debtors’ Days	Days	683	532
Interest coverage	x	26.0	23.9
Debt to equity ratio	x	0.0	0.0
Return on assets	%	18.3	13.5
Return on equity	%	41.5	27.0
Return on capital employed	%	59.2	40.7

To see how SONATA SOFTWARE has performed over the last 5 years, please visit here.

SONATA SOFTWARE Share Price Performance

Over the last one year, SONATA SOFTWARE share price has moved up from Rs 164.9 to Rs 509.4, registering a gain of Rs 344.5 or around 209.0%.

Meanwhile, the S&P BSE IT Index is trading at Rs 26,543.2 (down 0.7%). Over the last one year it has moved up from 12,842.7 to 26,543.2, a gain of 13,701 points (up 106.7%).

Overall, the S&P BSE SENSEX is up 74.1% over the year.

(To know more, check out historical annual results for SONATA SOFTWARE and quarterly results for SONATA SOFTWARE)

Read: Latest Annual Report Analysis of SONATA SOFTWARE