Sonata Software vs KPIT Technologies Q4 FY26

SO

Sonata Software

Q4 FY26 · Information Technology

Sonata Software reported Q4 FY26 consolidated revenue of ₹2,536.2 crore, down 3.1% YoY, impacted by domestic headwinds from a large client moving to direct billing. International services revenue grew 6% QoQ in constant currency to $82.4 million, with EBITDA margin expanding 70 bps QoQ to 20.2% driven by AI-led productivity gains and utilization of 91.8%. PAT for international services grew 40.6% QoQ to ₹84.2 crore. The company won two large deals in Q4, including a core banking modernization with a global fintech. AI pipeline reached $280 million, contributing 18% of total order book. Management remains cautiously optimistic on gradual growth improvement, but macro uncertainty and elongated client decision cycles persist. Key risk: sustainability of TMT vertical upturn and potential further contraction in BFSI clients.

Guidance read

International services EBITDA margin to remain at similar levels: Management expects to maintain current EBITDA margin (~20.2%) in the near term, with potential investments for growth. Domestic business to return to growth trajectory in FY27: After covering the loss from a large client moving to direct billing, domestic business is expected to resume historical growth rates within one to two quarters. AI pipeline to drive gradual improvement in growth over medium term: Management remains cautiously optimistic on growth, expecting gradual improvement driven by AI and digital transformation initiatives.

Risk read

Key risks include Sustained macro uncertainty and elongated client decision cycles — Management noted that client decision cycles remain elongated due to macroeconomic challenges, which could delay deal closures and revenue conversion.; Potential further contraction in BFSI vertical — Despite a large deal win, management acknowledged that some large BFSI clients may continue to contract spending, impacting growth.; Sustainability of TMT vertical upturn — Management expressed caution on the recent upturn in the TMT vertical, noting that it may not be sustainable and needs to be monitored.; Domestic business margin pressure from new customer acquisitions — New customer wins in domestic business may initially come at low or zero margins, though management believes this is manageable through mix and upselling..

Promise ledger

Scorecard data is being built as historical quarters are processed.

KP

KPIT Technologies

Q4 FY26 · Information Technology

KPIT reported a muted FY26 with Q4 constant currency growth of 1.8% QoQ, but highlighted $349M in deal wins and 18% YoY growth in trucks & off-highway. Two large SDV programs are ramping down, creating a ~4-5% sequential revenue gap in H1 FY27, partially offset by new account wins. Management guided FY27 EBITDA margin of 20.5-21.2% despite increased AI investments, and medium-term margin expansion to 22-24% driven by solutions/products mix shift to 50% of revenue. Key risks include further program cancellations (e.g., Honda) and macro headwinds from tariffs/geopolitics. The company is expanding into India, China, and micromobility, but near-term growth remains uncertain.

Guidance read

FY27 EBITDA margin guidance of 20.5-21.2%: Despite increased investments in AI, solutions, and new markets, management expects EBITDA margin to improve modestly. Medium-term EBITDA margin target of 22-24%: Driven by higher share of solutions and products (target 50% of revenue in 3 years) and fixed-price contracts. Solutions & products revenue to grow 30% YoY in FY27: Management expects 30%+ growth in this segment, which currently represents ~15% of revenue. India revenue to double in FY27: India currently ~4% of revenue; management expects strong growth driven by local OEMs and global OEMs' India-for-India strategy.

Risk read

Key risks include Unexpected program cancellations (e.g., Honda) — Honda cancelled all new platform programs, impacting KPIT's revenue. Management noted this was a surprise and will affect H1 FY27.; Delays in middleware and autonomous driving programs — New architecture programs have been pushed out, leading to lower-than-expected revenue in these areas. Recovery may take 1-2 years.; Competition from Chinese automotive R&D firms — Analyst raised concern about Chinese competitors with high R&D spend and negative EBITDA margins. Management acknowledged competition but believes KPIT's localized solutions and ecosystem give it an edge.; Macro headwinds from tariffs and geopolitical conflicts — Management noted that if current conflicts persist beyond 3-6 months, they could impact OEM spending, especially in the truck segment..

Promise ledger

Scorecard data is being built as historical quarters are processed.