ICICI Direct has a chance to go up by 25%

Business Business: Midcap IT stock Sonata Software has been under pressure so far this year. However, according to ICICI Direct, the stock has strong growth potential in the long term. The brokerage firm has a buy call on the stock with a target price of ₹770, indicating an upside potential of 25 per cent. As of close on August 19, Sonata Software’s share price has declined nearly 15 per cent this year, while equity benchmark Sensex has gained over 11 per cent. On a monthly scale, the stock has declined over 15 per cent this month after rising 15 per cent in June and 25 per cent in July. In intraday trade on Tuesday, August 28, Sonata Software’s share price declined over one per cent. The stock hit a 52-week high of ₹867.10 on February 27 this year and a 52-week low of ₹469.05 on June 4. ICICI Direct positive about Sonata Software ICICI Direct said that Sonata Software expects the growth momentum to accelerate from the second half of the current financial year (H2FY25).

ICICI Direct said,

“Management is confident of achieving its $1.5 billion target by FY27, although this could be delayed by two to four quarters. The IITs (IT Services) pipeline is healthy and supported by three large deals won across healthcare, manufacturing and BFSI.” ICICI Direct said, “Long-term growth is driven by AI, large deals and key client contributions. We expect IT Services to grow at a CAGR of 12.8 per cent in dollar terms during FY24-26E and around 8.9 per cent in FY25.”