Shares of Sonata Software rallied over 18% on Tuesday, June 16, marking the most significant gain in five years according to CNBC TV18. The stock surge was driven by a sharp spike in trading volumes, with activity running nearly 25 times above normal levels. The stock was last trading 17.1% higher at ₹304.90, demonstrating strong investor confidence following the company's latest quarterly results and NCLT approval. According to CNBC TV18, the stock is trading above its 5-day, 20-day, 50-day, 100-day and 150-day moving averages, though it remains below its 200-day moving average, with the relative strength index (RSI) standing at 47.1, indicating the stock is neither overbought nor oversold.
The company reported robust financial results for the March quarter, with Earnings before interest and tax (EBIT) rising 5.6% quarter-on-quarter and EBIT margins expanding by 160 basis points. As reported by CNBC TV18, while topline fell 17% sequentially largely due to weakness in the domestic business, profitability showed significant improvement. The company also strengthened its order book during the quarter, securing two large deals - an AI-driven platform modernisation mandate from a global fintech company and a modern engineering contract from a private equity-backed software firm.
Artificial intelligence continues to emerge as a key growth driver for Sonata Software, with the company's AI-focused pipeline expanding to $335 million. According to CNBC TV18, the company has already secured AI-related deal wins worth approximately $13.7 million. The company's investor presentation highlights strong enterprise client traction, with Fortune 500 companies accounting for 37% of its large-deal pipeline, demonstrating growing traction among global enterprise clients. The merger approval with Encore IT Services is expected to further strengthen the company's AI capabilities and market position.
The NCLT's Chennai bench approved the scheme of amalgamation between Encore IT Services and Sonata Software, stating that the scheme appears to be 'prima facie not in any way detrimental to the interest of the members of the companies'. As reported by Moneycontrol, under the merger scheme, Encore IT Services, a wholly owned subsidiary of Sonata Software, will stand dissolved without undergoing the process of winding up. The amalgamation is aimed at simplifying the group's corporate structure, reducing administrative and compliance costs, and improving operational efficiency. The companies operate in complementary areas - Encore IT Services focuses on digital transformation, cloud computing and software development services, while Sonata Software concentrates on AI-led digital transformation, cloud and data modernisation, and enterprise technology solutions.
