Q2 Review: Sonata Software's Q2 Highlights | BQ Prime - video Dailymotion

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#SonataSoftware stock gains on bonus share issue announcement. In conversation with the company’s CFO Jagannathan Chakravarthi on the growth outlook for the coming quarters. #BQLive

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00:00 Welcome to BQ Prime.

00:01 Joining us today is Mr. Jagannathan Chakraborty.

00:03 He's the chief financial officer of Sonata Software.

00:06 He's speaking to us a day after the company announced

00:08 its earnings, where the revenue rose by more than a fourth

00:12 quarter on quarter, and the net profit jumped more than 10%.

00:15 That, in a way, makes Sonata Software kind of an outlier

00:19 in the IT pack, as we know so far.

00:22 Mr. Chakraborty, welcome to BQ Prime.

00:26 Thank you.

00:27 Good morning to all.

00:28 So if I ask you to summarize your earnings that came out

00:32 yesterday, what would you say, as far

00:35 as your domestic business is concerned,

00:36 as well as the international business is concerned, sir?

00:39 Yeah.

00:40 Thanks for this opportunity to BQ Prime.

00:43 Good morning to all the investors.

00:46 Last, we have reported our results yesterday.

00:49 Our international business revenue

00:51 grew by 4.6% quarter on quarter in reported dollar terms.

00:55 In constant currency, it was 5.2%.

00:58 And in rupee terms, it was 5.7% quarter on quarter growth.

01:02 Year-on-year growth has been pretty strong at 40%

01:06 between last year and current year, same quarter.

01:09 The profit has gone up by 10%.

01:12 It has been a very good quarter for us.

01:15 Our gross margin expanded, and also our utilization

01:18 resulting in utilization increase.

01:21 And also, we were able to bring in the mixed change

01:25 a little bit on onsite offshore mixed change, which

01:28 has changed onsite revenue has come down from 29% to 26%.

01:33 These two have enabled our EBITDA

01:35 to grow by almost 2.3% compared to last quarter.

01:41 We continue to see a very positive momentum.

01:43 Our order book and pipeline is very strong.

01:46 We continue to see a good growth in the revenue

01:48 in the coming quarters.

01:50 However, as we maintained earlier,

01:52 we will continue to-- for this year,

01:55 we maintained our guidance of high-teams growth

01:58 in revenue in international business.

02:01 And the EBITDA will be at the low 20s, which is our target.

02:05 Because we need to invest about 1.5% to 2%

02:10 every quarter for the future growth opportunity,

02:14 particularly in AI and in Microsoft Fabric.

02:17 We will continue to invest, and this

02:20 will help us to leverage the growth and faster

02:23 growth in the coming quarters.

02:25 Coming to this domestic--

02:27 Yeah.

02:28 So there are two key takeaways that I see from your summary.

02:33 One is the deal pipeline.

02:35 That is, I think, about 35 deals in your deal pipeline

02:39 that you have.

02:39 And you talk about your guidance as well.

02:42 So considering both the factors, do you

02:45 see a delay in the conversion of deals into revenue,

02:50 something that most of your peers have seen so far?

02:53 If there is a certain delay in the deal conversion,

02:56 how do you expect to meet your revenue and your margin

03:00 targets, sir?

03:02 The deal pipeline delays, I'm not

03:05 saying going out across the industry.

03:07 Particularly, it is soft and high-tech.

03:10 And it is a little soft in health care sector.

03:13 Otherwise, we are seeing other sectors,

03:15 the deal pipeline is not that impacted

03:18 because of the slowness.

03:20 As mentioned earlier, we were able to convert the deals,

03:24 pretty good large deals we have converted.

03:26 Hence, we are seeing the momentum.

03:28 And we feel that we will continue

03:31 to be able to convert the deals in the next couple of quarters

03:34 so that the momentum continues to grow for us

03:37 in the coming quarters also.

03:39 Overall, whatever the guidance we

03:41 have given in the beginning of the year, that high-tech group,

03:43 we are very confident of meeting for this year.

03:46 And the uncertainty, there are uncertainties

03:49 in the overall economic situations

03:51 of the developed countries like US and Europe.

03:57 We will, if there is any update coming to us,

03:59 we'll mention about that in the later quarters.

04:03 But we don't see, at least for this year,

04:04 we don't see any issue.

04:06 Next year also, we see that at least we

04:09 are very positive about next year also for the opportunities

04:13 that can come.

04:14 So clearly, you believe that your second half

04:16 of the fiscal and early part of the next fiscal

04:18 are going to be--

04:20 you'll see growth in these times?

04:24 Yeah, growth.

04:25 We continue to have growth.

04:26 We are confident of continuing to have the growth.

04:28 OK.

04:29 So would you be hiring as well to make the most

04:33 of this incoming growth, sir?

04:36 I'm asking this question because we have seen a headcount

04:38 decline at other companies.

04:40 What is the hiring picture at your level?

04:43 Are you going to make any more fresher hiring decisions?

04:47 The question of hiring is actually

04:49 a relative to the project requirement.

04:52 Based on the requirements, whatever

04:54 project requirements required, we will continue to hire.

04:57 That's about the latter hire.

04:59 The campus additions, we are evaluating

05:02 on what are the requirements from the business at present.

05:04 So based on that, we will decide in the course of the year.

05:07 There is no decision to not hire,

05:09 and there is no decision specifically on this count.

05:13 Wherever we have requirements from the customer,

05:16 we will continue to focus on hiring also.

05:20 OK.

05:20 So have you put out your wage hikes this year?

05:23 Have your employees received the salary hikes?

05:27 No, we are still--

05:29 we will decide about this during the course of this quarter.

05:32 We are still evaluating the situations.

05:35 In relation to this, I would ask you one more question.

05:38 What are the margin levers in play still that you have,

05:41 the margin levers that you still have in play for meeting

05:43 that EBIT guidance, the operational profitability

05:46 guidance of in your low 20s, sir?

05:50 No, we are already on top of that, particularly

05:53 utilization under the onsite offshore mix and the pyramid.

05:58 All the three have-- we have a leverage.

06:00 The pyramid is particularly is a good area

06:03 where we can probably have strong changes happening.

06:09 And this pyramid will help me to maintain the overall cost

06:12 and also maintain the margin.

06:14 And the rest of the utilization, some changes

06:17 in the utilization on the mix may also

06:19 help me to have a little--

06:23 that will be the tailwinds in the margins perspective.

06:27 But we will continue to invest, as I mentioned to you,

06:30 from the current level.

06:33 It is not one way up for us.

06:35 We will continue to invest.

06:36 And based on the investment, the margin range, overall range,

06:39 will be in the low 20s.

06:41 OK, final question, something for the investors.

06:44 You have announced an interim dividend of rupees 7 per share.

06:47 And you also have announced a bonus share issue.

06:50 So how are you going to fund the dividend?

06:52 And what can the shareholders look forward to?

06:56 We are cash rich.

06:59 Now, we have a net of debt also.

07:01 We are a cash rich company.

07:02 We will always have been regularly paying dividends.

07:07 We are maintaining the same dividend

07:08 what we paid last year.

07:10 And we will continue to pay this dividend to the shareholders

07:14 as per our agreed stated policy.

07:17 And this, our situation, we are from--

07:22 pay the dividend from the internal accruals.

07:24 OK, what about the bonus share issue, sir?

07:26 What is the rationale behind that?

07:30 We wanted to take care of the shareholders who

07:32 have been with us for a long time.

07:34 We want to thank-- this is a big thank from the management

07:36 to the shareholders.

07:38 Thanks to our board approval, we were

07:39 able to give the-- pass on the benefit of this

07:43 to the shareholders.

07:45 This is for the shareholders who have traveled with the company

07:48 and being--

07:49 who have their confidence on our performance.

07:52 We are very, very sure that they will continue

07:54 to be our shareholders and benefit from our group

07:57 in the coming years.

07:58 All right.

07:59 Thank you, Mr. Chakravarty, for all the insights

08:02 that you have given us about Sonata Software.

08:04 Thank you, viewers, for tuning in.

08:05 This is Tushar for BQ Prime.

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Q2 Review: Sonata Software's Q2 Highlights | BQ Prime

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