According to reports from CNBC TV18, Sonata Software Ltd. delivered strong top-line growth in Q3FY26, with revenue surging 45.4% quarter-on-quarter to ₹3,080 crore, up from ₹2,119 crore in the preceding quarter. The company's operating performance also showed improvement, with EBIT rising 18.7% QoQ to ₹173.6 crore, compared to ₹146.3 crore in the prior quarter. However, this growth came alongside margin pressures that impacted overall profitability.
As reported by CNBC TV18, despite the revenue surge, net profit declined 13.3% quarter-on-quarter to ₹104 crore, down from ₹120 crore in the previous quarter. The primary driver of this profit decline was EBIT margin compression, narrowing to 5.6% from 6.9% in the previous quarter, representing a contraction of 130 basis points quarter-on-quarter. This margin pressure offset the strong revenue growth and contributed to the overall decline in net profitability. The company's absolute EBITDA grew 15.9% to ₹200.2 crore, highlighting the direct impact of margin erosion on profitability despite operational improvements.
According to CNBC TV18, the company's revenue acceleration was partly fueled by significant deal wins, including two major contracts totaling $129 million. This substantial contract value demonstrates Sonata Software's ability to secure large-scale engagements in the competitive IT services market. The company is strategically pivoting towards AI-driven and digital engineering services, with Cloud & Data contributing 63% of revenue, signaling a move towards higher-growth areas that align with current market trends.
According to CNBC TV18, shares of the company closed at ₹306.80 apiece on February 6, down 0.76% for the day. The mixed quarterly performance, with strong revenue growth but margin compression leading to profit decline, appears to have reflected investor concerns about the company's ability to maintain profitability levels despite robust top-line expansion. The Nifty IT index experienced recent weakness with a 1-week return of -5.4% as of February 5, 2026, creating a challenging environment for IT services companies. Historical data shows similar margin pressures have led to sharp stock declines, with shares plunging 15.1% on February 7, 2025, following a Q3 profit drop attributed to margin erosion.
