Is Sonata Software overvalued or undervalued?

As of 5 June 2025, Sonata Software's valuation grade has moved from expensive to fair, indicating a more favorable assessment of its market position. The company is currently fairly valued, with a PE ratio of 27.08, an EV to EBITDA ratio of 16.41, and a ROE of 24.89%. In comparison to peers, TCS has a PE ratio of 25.23 and an EV to EBITDA of 17.63, while Infosys shows a PE of 24.32 and an EV to EBITDA of 15.83, suggesting that Sonata is positioned competitively within its industry.
Despite a challenging year-to-date return of -30.62% compared to the Sensex's 5.62%, Sonata's strong ROCE of 37.20% underscores its operational efficiency. The company's valuation metrics, alongside its peer comparisons, support the conclusion that Sonata Software is fairly valued at its current price of 417.00.