SONATA SOFTWARE 2021-22 Annual Report Analysis

Wed, 8 Jun

SONATA SOFTWARE has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

SONATA SOFTWARE Income Statement Analysis

• Operating income during the year rose 31.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 20.3% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 8.2% in FY22 as against 9.0% in FY21.
• Depreciation charges increased by 19.6% and finance costs increased by 17.3% YoY, respectively.
• Other income grew by 293.9% YoY.
• Net profit for the year grew by 54.3% YoY.
• Net profit margins during the year grew from 5.8% in FY21 to 6.8% in FY22.

SONATA SOFTWARE Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	42,281	55,534	31.3%
Other income	Rs m	278	1,093	293.9%
Total Revenues	Rs m	42,558	56,627	33.1%
Gross profit	Rs m	3,794	4,564	20.3%
Depreciation	Rs m	396	473	19.6%
Interest	Rs m	154	181	17.3%
Profit before tax	Rs m	3,521	5,004	42.1%
Tax	Rs m	1,082	1,239	14.6%
Profit after tax	Rs m	2,440	3,764	54.3%
Gross profit margin	%	9.0	8.2
Effective tax rate	%	30.7	24.8
Net profit margin	%	5.8	6.8

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SONATA SOFTWARE Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 15 billion as compared to Rs 12 billion in FY21, thereby witnessing an increase of 31.5%.
• Current assets rose 29% and stood at Rs 22 billion, while fixed assets rose 26% and stood at Rs 11 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 33 billion as against Rs 25 billion during FY21, thereby witnessing a growth of 28%.

SONATA SOFTWARE Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	9,032	10,966	21.4
Current Liabilities	Rs m	11,699	15,385	31.5
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	25,412	32,515	28.0
Current assets	Rs m	16,997	21,887	28.8
Fixed Assets	Rs m	8,415	10,628	26.3
Total Assets	Rs m	25,412	32,515	28.0

SONATA SOFTWARE Cash Flow Statement Analysis

• SONATA SOFTWARE's cash flow from operating activities (CFO) during FY22 stood at Rs 5 billion, an improvement of 1.7% on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -835 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 930 million from the Rs 3 billion net cash flows seen during FY21.

SONATA SOFTWARE Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	4,426	4,503	1.7%
Cash Flow from Investing Activities	Rs m	-1,141	-835	-
Cash Flow from Financing Activities	Rs m	-621	-2,706	-
Net Cash Flow	Rs m	2,685	930	-65.3%

Current Valuations for SONATA SOFTWARE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 36.2, an improvement from the EPS of Rs 23.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 699.4, stands at 19.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 6.7 times, while the price to sales ratio stands at 1.3 times.
• The company's price to cash flow (P/CF) ratio stood at 18.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	406.9	534.4
TTM Earnings per share	Rs	23.5	36.2
Diluted earnings per share	Rs	23.2	35.8
Price to Cash Flow	x	18.9	18.9
TTM P/E ratio	x	22.0	19.5
Price / Book Value ratio	x	4.0	7.3
Market Cap	Rs m	36,368	80,217
Dividends per share (Unadj.)	Rs	14.0	21.0

Ratio Analysis for SONATA SOFTWARE

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.4x during FY22, from 1.5x during FY21. 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 improved and stood at 28.7x during FY22, from 23.9x during FY21. 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 improved and stood at 34.3% during FY22, from 27.0% during FY22. 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 improved and stood at 47.3% during FY22, from 40.7% during FY21. 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 improved and stood at 12.1% during FY22, from 10.2% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	1.5	1.4
Debtors’ Days	Days	532	587
Interest coverage	x	23.9	28.7
Debt to equity ratio	x	0.0	0.0
Return on assets	%	10.2	12.1
Return on equity	%	27.0	34.3
Return on capital employed	%	40.7	47.3

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 down from Rs 737.2 to Rs 699.4, registering a loss of Rs 37.8 or around 5.1%.

Meanwhile, the S&P BSE IT Index is trading at Rs 30,011.0 (up 0.4%). Over the last one year it has moved up from 28,096.6 to 30,011.0, a gain of 1,914 points (up 6.8%).

Overall, the S&P BSE SENSEX is up 5.5% 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