Sonam delivered a 30% profit jump in Q3 – and there's ₹2,500 cr of work left to do.
Revenue up 22%, margins at 25%, and a ₹2,500 cr order book gives the management room to stay confident.
What's new
- Revenue up 22% to ₹320 cr, PAT up 30% to ₹55 cr.
- EBITDA margin expanded 300 bps to 25% on cost management.
- Debt reduced by ₹50 cr; order book stands at ₹2,500 cr.
Why this matters
The improved margins and debt reduction strengthen the balance sheet, but with a P/E of 28.7x and ROE of 10.2%, the valuation already prices in some optimism. The real test is converting the ₹2,500 cr order book into revenue without margin dilution.
What we're watching
- Order book execution pace and margin sustainability.
- Whether the net debt/equity can stay below 0.5.
- Management's guidance on revenue trajectory for FY25.
The full read
Sonam's Q3 numbers show a company executing well: revenue up 22% to ₹320 cr, PAT up 30% to ₹55 cr, and margins hitting 25% — a 300 bps improvement. Debt reduction of ₹50 cr brought net debt/equity to 0.5, and ₹80 cr in cash provides a buffer. The ₹2,500 cr unexecuted order book, roughly 6x annual revenue, offers strong visibility. But the trailing P/E of 28.7x and ROE of 10.2% leave little room for error. The market already expects delivery; the next test is whether Sonam can expand margins further as it works through that large backlog.
Questions answered
- What drove the margin expansion in Q3?
- Management cited cost management and operational efficiencies as the main drivers, lifting EBITDA margins from 22% to 25%.
- How much debt did Sonam reduce?
- The company reduced outstanding debt by ₹50 cr, bringing its net debt-to-equity ratio to 0.5.
- What is the current valuation of Sonam?
- With a market cap of ₹210 cr and trailing P/E of 28.7x, the stock trades at a premium considering the ROE of 10.2%.
- Is the order book diversified?
- The filing does not specify diversification, but the ₹2,500 cr order book is a large backlog relative to annual revenue.
- How much cash does Sonam hold?
- The company has cash and equivalents of ₹80 cr, adding a cushion to its balance sheet.
- What is Sonam's pre-sales and collections trend?
- Pre-sales reached ₹450 cr and collections were ₹380 cr, both up on the prior year.