Is Sonata Software overvalued or undervalued?

Sep 17 2025 08:03 AM IST
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As of September 16, 2025, Sonata Software is fairly valued with a PE ratio of 24.81 and strong operational efficiency, despite a year-to-date stock decline of 36.94%, contrasting with the Sensex's 5.43% increase.
As of 16 September 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 24.81, an EV to EBITDA of 15.52, and a ROE of 24.89%. In comparison, TCS, which holds an attractive valuation, has a PE ratio of 23.1 and an EV to EBITDA of 16.29, while Infosys, also fairly valued, has a PE ratio of 23.06 and an EV to EBITDA of 15.15.

Despite the fair valuation, Sonata Software has experienced a significant decline in stock performance year-to-date, down 36.94%, compared to a 5.43% increase in the Sensex. This disparity highlights potential market concerns, yet the company's strong ROCE of 37.20% suggests robust operational efficiency. Overall, Sonata Software appears to be fairly valued within its industry, with competitive ratios compared to its peers.
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