Sonata Software Ltd- Trend and chart pattern analysisSonata Software Ltd-
technical + fundamental analysis based on chart and industry outlook 👇
Technical Chart Analysis (Weekly Chart)
Current Price: 356.40
Trend: The stock had a steep rally till 1,200 and then corrected sharply into a downtrend channel. Now it is stabilizing and attempting a base formation.
- Support Levels
334 - immediate support
286 - strong support zone
243 - medium-term support
228 - long-term crucial base
148 - major bottom support
- Resistance Levels
400 - near-term hurdle
503 - key weekly resistance (breakout confirmation if crossed)
600 - medium-term target if trend sustains
700+ - only after strong momentum breakout
- Chart Pattern
Stock is currently consolidating between 330-400.
Possible formation of a W-bottom / double bottom, if 330-334 holds.
A sustained move above 503 could trigger a trend reversal rally toward 600-700.
If it breaks below 286, weakness may extend to 243/228 zone.
🏢 Business & Competition
Sonata Software operates in IT services, cloud, and digital transformation. It earns revenues from export-oriented IT services, particularly in Microsoft ecosystem solutions.
- Key Competitors
Mid-cap IT peers: Mphasis, L&T Technology, Persistent Systems, Coforge, Birlasoft, Mindtree (merged into LTIMindtree).
Sonata is relatively smaller in scale compared to peers but has a niche in Microsoft Dynamics 365 solutions.
📈 Fundamental Ratios (Latest available FY24 data)
Market Cap: 9,500 Cr
P/E Ratio: 27 (mid-cap IT avg. 30-35) - slightly undervalued compared to peers
ROE (Return on Equity): 25% - very strong
ROCE (Return on Capital Employed): 30% - efficient capital use
Debt-to-Equity: 0.05 - virtually debt-free
Dividend Yield: 1.5% - decent payout for investors
Revenue Growth (3Y CAGR): 15-18%
EPS Growth (3Y CAGR): 20%
👍 Investment View
Technicals: Base building in progress. Sustaining above the 400-503 zone is crucial for the next uptrend.
Fundamentals: Strong ROE/ROCE, debt-free, consistent dividend payer. Attractive in mid-cap IT basket.
Risks: Global IT slowdown, client concentration risk, strong USD-INR dependency.
👉Disclaimer
This analysis is for educational & informational purposes only.
It is not financial advice or a buy/sell recommendation.
Stock markets are subject to risks - please consult your financial advisor before making any investment decisions.
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