The new labour code changes hit the mid-cap IT services company Sonata Software hard in the quarter ended December 31, 2025. Its effective profit-after-tax (PAT) sunk 13% quarter-on-quarter (QoQ) to ₹104.4 crore in Q3 FY26.
Notwithstanding the one-time exceptional items linked to the implementation of India’s new labour codes, the company’s PAT was up a 6.1% QoQ and 21.4% year-on-year (YoY).
The exceptional item relates to a ₹31.3 crore provision towards past employee benefit costs, which the company recognised following the notification of the new labour codes. This included ₹23.3 crore towards gratuity and ₹8 crore towards leave encashment, recorded as a one-time expense during the quarter and reflected in post-exceptional profit, according to the company’s investor presentation.
Sonata Software’s growth momentum was led by strong traction in AI-led modernisation, with an AI deal win of about ₹114 crore and an AI pipeline of about ₹2,780 crore, while cloud and data now account for 57% of the pipeline.
The company also closed two large deals during the quarter, continued to scale vertical-focused go-to-market initiatives and partnerships with Microsoft and AWS, and saw steady expansion in its domestic business.
It posted consolidated revenue of ₹3,080.6 crore for Q3 FY26, up 45.4% QoQ, while EBITDA (earnings before interest, taxes, depreciation, and amortisation—signifying operational profitability) stood at ₹200.2 crore, rising 15.9% QoQ before accounting for forex and other items.
Commenting on performance, Samir Dhir, MD and CEO of Sonata Software, said that the business secured a large deal in the BFSI vertical with a Fortune 500 fintech client, reinforcing its strategy of driving growth through large deals backed by disciplined execution.
“Our continued strategic investments in Artificial Intelligence contributed approximately 14% of the overall order book for the quarter,” he said in a statement.
Sujit Mohanty, MD and CEO of Sonata Information Technology Limited, added, “We delivered a seasonally strong quarter in our domestic business. Our three-pillar strategy to diversify the business is in motion, focused on building a scaled and resilient operating model. We remain confident that this strategic direction will drive a more diversified, scalable, and future-ready business.”
The company’s total headcount stood at 6,643 for the quarter, an increase of 487 over the previous quarter.
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