Technology
Sonata Software
An international IT-services business paired with a huge, low-margin technology distribution arm.
Sonata looks like one company in the annual report. Economically, it behaves like two very different businesses. One side of Sonata helps global enterprises modernise cloud, data and software systems. The other distributes technology products and licences in India at enormous scale but razor-thin margins. Put them together and the revenue number can look gigantic while the real profit engine sits somewhere else. That makes Sonata a lesson in why revenue alone can mislead.
The one thing to remember: A rupee of services revenue is economically very different from a rupee of distribution revenue.
How the business works
Sonata’s international IT-services arm works on cloud, data, digital engineering, Microsoft platforms and AI-led modernisation. Its domestic product business distributes software and technology products, creating large turnover but small margins. Services earn far more profit per rupee of revenue. Acquisitions have expanded capabilities overseas.
FY2025-26 snapshot
Revenue
about ₹10,701 crore
Net profit (PAT)
about ₹464 crore
EBITDA
about ₹741 crore
Gross cash
about ₹606 crore
Net cash
about ₹31 crore
Figures are for the financial year 2025-26 as reported by the company. Educational context only.
Where the money comes from
International IT services Cloud, data and digital engineering Microsoft/enterprise platforms Domestic technology distribution
What could make it much bigger?
AI, cloud and data modernisation can lift services growth. Cross-selling acquired capabilities can expand wallet share. A higher services mix improves revenue quality and margins.
What can go wrong
Global client spending can slow.
Acquisition integration can affect growth and margins.
Distribution can inflate revenue without improving profit much.
5 things to watch
International services growth
Services margin
Large-deal wins
Acquisition integration
Services versus distribution mix
Ramsam Takeaway
Sonata is a mix story. The huge distribution turnover is visible, but the more valuable part is international services. If services grows faster, earnings quality can improve even when total sales growth looks ordinary. Always separate the two businesses before judging the company.
This profile is educational context only. Ramsam does not rate companies or suggest whether to buy, hold or sell anything.