IT services firm Sonata Software’s net profit fell by 13.1% quarter-on-quarter to Rs 104 crore compared to Rs 120 crore in the previous quarter, due to an incremental expense towards past service costs of Rs 31.3 crore owing to the new labour codes. Meanwhile, revenue grew by a significant 45.4% to Rs 3,081 crore as compared to Rs 2,119 crore in the previous quarter.
Regulatory Headwinds
The company’s Ebitda grew 15.9% to Rs 200 crore sequentially compares to Rs 173 crore in Q2FY26, while Ebitda margin stood at 6.5% in comparison with 8.1% in the last quarter.
The firm also added three new customers for its international IT services during the quarter.
“International IT services delivered steady progress during the quarter, with consolidated PAT improving significantly in the last two quarters. Following a 10% PAT growth in the previous quarter, we achieved a further 6.1% q-o-q growth. The business secured a large deal in the BFSI vertical with a Fortune 500 fintech client, reinforcing our strategy of driving growth through large deals backed by disciplined execution. Our continued strategic investments in artificial intelligence contributed approximately 14% of the overall order book for the quarter,” Samir Dhir, MD & CEO, Sonata Software, said.
There were two large deals won in the quarter — both from the BFSI sector.
The AI-led pipeline comprised $335 million of the total revenue with share from AI revenue growing from 10% of the order book in the past quarter.
AI Pivot
Dhir also said the firm has internally operationalised AI across and is training employees on vibe coding.
Tailwinds from the healthcare and life sciences as well as the BFSI sector and data and AI-led deal wins show the growing demand among clients for modernisation, Dhir said during the analyst call. However, they also faced headwinds from budget constraints that three clients from their top 10 faced.
Additionally, their North American business has jumped to 70% of total revenue from 54% three years ago.
Sujit Mohanty, MD & CEO, Sonata Information Technology, noted that the firm’s three-pillar strategy to diversify the business is in motion, focused on building a scaled and resilient operating model. “We remain confident that this strategic direction will drive a more diversified, scalable and future-ready business,” he added.
Sonata Software also declared its third interim dividend for the financial year at Rs 1.25 per share in line with the commitment made during the first-quarter of FY26 earnings call.
The firm also announced that they had received approval for the re-appointment of Srikar Reddy as Executive Vice Chairman and Whole-time Director with effect from April 4 this year until April 3, 2028.