SONATA SOFTWARE 2022-23 Annual Report Analysis

Wed, 12 Jul

SONATA SOFTWARE has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

SONATA SOFTWARE Income Statement Analysis

• Operating income during the year rose 34.1% on a year-on-year (YoY) basis.
• The company's operating profit increased by 33.0% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 8.1% in FY23 as against 8.2% in FY22.
• Depreciation charges increased by 25.0% and finance costs increased by 2.7% YoY, respectively.
• Other income declined by 36.6% YoY.
• Net profit for the year grew by 20.0% YoY.
• Net profit margins during the year declined from 6.8% in FY22 to 6.1% in FY23.

SONATA SOFTWARE Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	55,534	74,491	34.1%
Other income	Rs m	1,116	708	-36.6%
Total Revenues	Rs m	56,650	75,199	32.7%
Gross profit	Rs m	4,541	6,041	33.0%
Depreciation	Rs m	473	591	25.0%
Interest	Rs m	181	185	2.7%
Profit before tax	Rs m	5,004	5,973	19.4%
Tax	Rs m	1,239	1,454	17.3%
Profit after tax	Rs m	3,764	4,519	20.0%
Gross profit margin	%	8.2	8.1
Effective tax rate	%	24.8	24.3
Net profit margin	%	6.8	6.1

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SONATA SOFTWARE Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 25 billion as compared to Rs 15 billion in FY22, thereby witnessing an increase of 59.6%.
• Long-term debt stood at Rs 3 billion as compared to Rs 0 million during FY22, a fall of 0.0%.
• Current assets rose 24% and stood at Rs 27 billion, while fixed assets rose 230% and stood at Rs 19 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 47 billion as against Rs 28 billion during FY22, thereby witnessing a growth of 67%.

SONATA SOFTWARE Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	10,966	12,912	17.8
Current Liabilities	Rs m	15,425	24,623	59.6
Long-term Debt	Rs m	0	3,051	0.0
Total Liabilities	Rs m	27,816	46,559	67.4
Current assets	Rs m	21,928	27,141	23.8
Fixed Assets	Rs m	5,888	19,418	229.8
Total Assets	Rs m	27,816	46,559	67.4

SONATA SOFTWARE Cash Flow Statement Analysis

• SONATA SOFTWARE's cash flow from operating activities (CFO) during FY23 stood at Rs 3 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -9 billion, an improvement of 926.4% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs 2 billion, an improvement of 169% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -3 billion from the Rs 930 million net cash flows seen during FY22.

SONATA SOFTWARE Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	4,502	2,684	-40.4%
Cash Flow from Investing Activities	Rs m	-833	-8,553	-
Cash Flow from Financing Activities	Rs m	-2,706	1,868	-
Net Cash Flow	Rs m	930	-3,163	-

Current Valuations for SONATA SOFTWARE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 32.6, an decline from the EPS of Rs 36.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 971.0, stands at 30.1 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 10.5 times, while the price to sales ratio stands at 1.8 times.
• The company's price to cash flow (P/CF) ratio stood at 17.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	534.4	537.1
TTM Earnings per share	Rs	36.2	32.6
Diluted earnings per share	Rs	26.8	32.2
Price to Cash Flow	x	18.4	17.8
TTM P/E ratio	x	20.7	30.1
Price / Book Value ratio	x	7.3	7.0
Market Cap	Rs m	80,217	91,025
Dividends per share (Unadj.)	Rs	21.0	15.8

Ratio Analysis for SONATA SOFTWARE

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.1x during FY23, from 1.4x during FY22. 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 33.2x during FY23, from 28.7x during FY22. 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 35.0% during FY23, from 34.3% during FY23. 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 38.6% during FY23, from 47.3% during FY22. 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 10.1% during FY23, from 14.2% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	1.4	1.1
Debtors’ Days	Days	606	606
Interest coverage	x	28.7	33.2
Debt to equity ratio	x	0.0	0.2
Return on assets	%	14.2	10.1
Return on equity	%	34.3	35.0
Return on capital employed	%	47.3	38.6

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 501.0 to Rs 971.0, registering a gain of Rs 470.0 or around 93.8%.

Meanwhile, the S&P BSE IT Index is trading at Rs 29,417.2 (down 0.9%). Over the last one year it has moved up from 27,660.3 to 29,417.2, a gain of 1,757 points (up 6.4%).

Overall, the S&P BSE SENSEX is up 20.5% over the year.

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