Sonata Software shares dropped more than 12% in initial trading on Thursday, April 17, following the warning that its international business performance had adversely affected its fourth-quarter revenue for FY25.
The drop is primarily due to the fact that revenue from its largest client is likely to be lower than anticipated, owing to the prevailing trade tensions and fresh tariffs by the US.
International business, which accounted for approximately 25% of Sonata’s total December quarter revenue, came in lower than anticipated this time. The company’s biggest client generated lower revenue, which accounted for the shortfall.
Earlier in February, in the Q3 earnings call, Sonata’s MD and Chairperson, Samir Dhir, had been optimistic about the growth of the company as per the first half of the year. Nevertheless, he had also raised an eyebrow for the second half by mentioning that the large client started reducing costs somewhere between November to early December, which would now affect the entire fourth quarter.
Dhir assured that the client relationship holds steady and the revenue decline is a short-term matter, more than likely impacting both Q4 and the beginning of FY26.
Previously, the CFO of the company, CN Jagannathan, had predicted that international IT services revenue could decline between 2.5% to 3.5% during Q3 owing to seasonally driven trends.
