Sonata Software is the stock on our radar on the back of the quarter 1 earnings revenues that went up by 18 percent on a sequential basis but the margins have contracted for the company juggernaut. Jagannathan Chakravarthi, CFO of the company, spoke with CNBC-TV18 in this regard.

Throwing more light on the numbers and business outlook, going forward, Chakravarthi said this quarter the revenue growth has been good. But we have two businesses, one is international business, which is a software services business and the other is India business, which is domestic value added resale business. “We have to see the margins of these two business in two different contexts.”

In the international business, the challenge for the company is not demand, as the pipeline is very strong. According to Chakravarthi, this demand is going to continue for the next couple of years or so but challenge is on the supply side because of the COVID second wave, that strongly hit during the end of April, May timeframe.

“We were having challenges because of the people taking leave, as well as for recruiting people and filling up the vacancy because we are focused only on the high end services like TRP, cloud data, those kind of high digital services, hence replacing them with the existing from the bench or recruiting people immediately and replacing the existing people during their leave time was a was a challenge for us during this quarter,” he said, adding that But I think we are addressing this and we are expanding our recruitment, we are gearing up that more to go address the demand requirements of the customer.”

The international business for the company is nearly $43-44 million but when asked if with the acquisition they could achieve a quarterly run rate of about $50 million going forward, he said, “Yes, it is possible and we are seeing a very strong growth prospects because this acquisition is going to add cloud services for us in US market as well as this is going to add to your vertical healthcare as well as the logistics and the business is also margin accretive.”

He said the margins for the new business run at nearly 18-20 percent EBITDA.

For full interview, watch video

(Edited by : Bivekananda Biswas)

First Published:Aug 5, 2021 7:29 PM IST