Shares of Sonata Software continued to move upward, touching a 52-week high of Rs 739 in heavy intraday trade on Monday, as they rose 9% on the BSE. Information technology (IT) stocks surpassed the previous high of Rs 689.95 on February 16. It was quoted near the all-time high of Rs 773 on October 20, 2021.

Over the past month, Sonata Software has surged 26%, beating the market after it reported strong financial results for the quarter ending December 2022 (Q3 FY 2023). In comparison, the S&P BSE Sensex gained 1% during the period. The average trading volume over the counter jumped more than threefold today, with 1.2 million shares changing hands on the NSE and BSE as of 11:08 am.

Sonata provides IT services (30%) and product licensing and deployment (70%). The company provides IT services to travel, retail, agriculture and commodities, as well as manufacturing and software suppliers. The company has no net debt and has healthy double-digit returns (RoCE over 30%).

For Q3FY23, Sonata’s IT services revenue in USD rose 4.7% QoQ and 3.9% in constant currency, while revenue in Rs was Rs 4,896 crore, up 6.3% QoQ and 23.9% in constant currency. Year-over-Year (YoY).

Ebitda’s margin for IT services fell 70 basis points quarter-on-quarter to 25.2%, driven by higher staff costs and marketing spending in the third quarter. The company’s consolidated profit after tax rose 20% year-on-year and 4% quarter-on-quarter to Rs 117.6 crore.

The company said it won four large deals from cloud transformation and customer experience modernisation, noting that none of these deals was vendor consolidation themes. The new CEO reiterated his plan to double IT services revenue within four years to accelerate growth. He also mentioned that he will continue to focus on large transactions and that strengthening his presence in BFSI and the healthcare vertical will be the cornerstone of achieving his growth goals.

Analysts at ICICI Securities changed their rating on Sonata from “hold” to “buy” following the release of third-quarter results. However, the stock is trading above its target price of Rs 725 per share.