Detailed Narrative
Leadership Transition and Strategic Focus
Sonata Software announced the appointment of Mr. Rajsekhar Datta Roy as the CEO for International Services, succeeding Mr. Samir Dhir. Mr. Roy, with over 30 years at Sonata, is tasked with leading the company into the new AI-driven paradigm, leveraging his experience in business development, technology, and delivery. The Board expressed strong confidence in his leadership to transform the company and adopt new AI strategies, building on the Harmoni concept.
International Business Performance and AI Momentum
The International Services segment reported Q4 FY26 USD revenue of $82.4 million, with a constant currency growth of 0.6% Q-o-Q. For the full year FY26, dollar revenue was $328.4 million, a degrowth of 2.1% Y-o-Y. However, AI-led initiatives showed strong momentum, contributing $16.9 million to the order book in Q4 2026 and $49 million for the full year, representing 18% of the total order book. The AI-led pipeline stood at $280 million. The company secured two large deals in Q4, including a significant Fintech modernization project.
Domestic Business Resilience Amidst Headwinds
The Domestic Business segment faced headwinds, with Q4 FY26 revenue at ₹1759.2 Crores, a degrowth of 25% Q-o-Q and 8.3% Y-o-Y. Despite this, PAT for the quarter grew 3.9% Q-o-Q and 2.5% Y-o-Y to ₹46.3 Crores. For FY26, domestic revenue grew 5.9% Y-o-Y to ₹7772.1 Crores, though PAT degrew 3.6% Y-o-Y to ₹171.7 Crores. Management expressed confidence in returning to historical growth rates within one to two quarters, having largely covered the impact of losing a major customer last year.
Consolidated Financials and Cash Position
Consolidated revenue for Q4 FY26 stood at ₹2536.2 Crores, reflecting a degrowth of 17.7% Q-o-Q and 3.1% Y-o-Y. Consolidated PAT for the quarter was ₹130.5 Crores, growing 25% Q-o-Q and 21.4% Y-o-Y. For the full year FY26, consolidated revenue reached ₹10,701.2 Crores (5.4% Y-o-Y growth) and PAT was ₹464.4 Crores (9.3% Y-o-Y growth). The company maintained a strong cash position, with a closing cash balance of ₹606 Crores and a net cash position of ₹31 Crores, a significant improvement from Q3 FY2026.
Margin Management and Investment Outlook
International Services EBITDA before other income and forex improved to 20.2% in Q4 FY26, up 70 bps Q-o-Q, driven by operational efficiencies, delivery efficiency, and cost optimization. Utilization also improved to 91.8%. Management aims to maintain EBITDA at similar levels in the short run but is open to investments for future growth, particularly in AI transformation, given the strong traction in AI-led order books.
Vertical Performance and Growth Drivers
Investment verticals, Healthcare, HLS, and Banking Financial Services, collectively contributed 30% of total revenue in Q4 2026. While BFSI remains under pressure, new wins in the payments area are seen as an opportunity. TMT showed a slight upturn in a top client, though sustainability is being monitored. The company is focusing on strengthening its dynamics go-to-market with AI solutions and building a data product for AI as a source to drive future momentum.
Capital Expenditure for Strategic Expansion
The increase in capex during Q4 FY26 was primarily due to the launch of a new facility in Chennai for a large BFSI customer. Management clarified this was a one-time📎 activity and not indicative of a new run-rate for future capex. The company does not have plans for other significant facility expansions at present, and future capex levels are expected to be similar to previous years, with investments prioritized for growth opportunities.