Sonata Software jumps 19% on NCLT nod, Q4 profit

What drove the sharp move in Sonata Software

Sonata Software Ltd saw a sharp intraday rally after news flow pointed to an NCLT go-ahead for the merger of Encore IT. The stock surged 18.56% to Rs 308.85 by 11:47 IST, making it the biggest gainer in the BSE ‘A’ group at the time. Trading activity also picked up sharply alongside the price move. On the BSE, about 8.5 lakh shares had traded on the counter by then. That was well above the one-month average daily volume of 63,730 shares cited in the same market snapshot.

While the NCLT-related trigger dominated the immediate reaction, other recent company updates have also been in focus for investors. Sonata has been in the news for a modernisation deal win in Australia, and for its Q4 FY26 earnings that showed profit growth even as revenue contracted in that quarter. Together, these points have shaped near-term sentiment around the stock.

Trading volumes stood out on the BSE

The volume jump was notable relative to recent activity levels. With 8.5 lakh shares traded on the BSE versus an average of 63,730 shares per day over the past month, the day’s participation looked unusually high. Such bursts in volume typically indicate that the event has pulled in short-term traders as well as investors repositioning around a specific corporate development.

The sharp move also placed Sonata at the top of the BSE ‘A’ group gainers list during the session referenced. For market watchers, that positioning matters because it highlights how concentrated the rally was, compared with broader index movement.

NCLT nod for Encore IT merger: what is known

The provided update flags an “NCLT nod for Encore IT merger” as the key catalyst behind the near-19% move. Beyond that headline reference, additional details such as the merger ratio, appointed date, or integration timeline were not included in the text provided.

Still, an NCLT clearance is generally treated as a procedural milestone because it helps move a corporate restructuring step from intention to implementation. The market reaction suggests investors interpreted the nod as reducing execution uncertainty around the merger process mentioned.

Earnings backdrop: Q4 FY26 profit rose, revenue contracted

Separately, Sonata Software’s shares were reported to have rallied nearly 10% on a Friday after the company posted Q4 FY26 results showing higher profit even as revenue declined in the quarter. Net profit rose 21% year-on-year to Rs 130.5 crore in Q4 FY26, compared with Rs 107.53 crore in the year-ago period.

The same update highlighted that revenue contracted in Q4 FY26, though the exact quarterly revenue figure was not provided in the text. The market response indicates that investors may have prioritised margin or cost discipline, or looked through the quarter’s revenue softness in favour of longer-term deal momentum.

Full-year FY26 numbers: net profit and revenue growth

On an annual basis, the company reported steady growth in FY26. Net profit rose more than 9% to Rs 464.4 crore for FY26. Revenue rose over 5% to Rs 10,701.2 crore from the previous year.

Management commentary in the provided text also pointed to performance in specific service lines. Sujit Mohanty, MD and CEO of Sonata Information Technology Limited, said the quarter saw strong performance in core cloud platform offerings, along with new client additions for cloud services and data protection solutions. He also said the company saw year-on-year growth from key accounts.

Deal wins and order book cues investors tracked

The text also references a multi-million dollar modernisation deal in Australia, which was linked to a separate 3% stock move in a headline. In addition, it notes that on April 28, 2025, Sonata Software announced a $13-million, five-year transformational engagement with a major US-based company in the Technology, Media, and Telecom (TMT) sector.

A brokerage view referenced in the text suggested H1 FY26 could be better than H2 FY25 on the back of a strong order book and AI deals. The update does not name the brokerage, and no further projections or target prices are provided.

Recent stock performance: mixed across timeframes

Price performance in the provided data shows a mix of short-term rebounds and longer-term weakness. In one snapshot, the stock was reported to have gained 14% in one week and more than 18% in one month, while being down around 20% so far in 2026 and 26% in one year. Over longer horizons, the same note said the stock dropped 33% in three years but gained 30% in five years.

Another return table in the text showed: 1 day +0.31%, 1 week +2.95%, 1 month -11.18%, 3 months -14.85%, 1 year -39.23%, 3 years +4.91%, and 5 years +119.21%. A separate return table cited: 1 day +10.91%, 1 month -14.96%, 1 year -39.46%, 3 years +41.64%, and 5 years +228.52%. These appear to reflect different observation points.

Key numbers at a glance

Market impact: what investors are reacting to

The combination of an NCLT-linked merger milestone and improving profit numbers has been the immediate driver of the sharp trading action described. The volume spike on the BSE, compared with the one-month average, underlines that the move was not limited to thin trading. Earnings details, especially the year-on-year rise in Q4 profit and the FY26 profit increase to Rs 464.4 crore, add support to the fundamental narrative in the background.

At the same time, the data presented also shows the stock has seen meaningful drawdowns across some longer timeframes, including about 20% down in 2026 (as cited) and roughly 39% down over one year in the return tables. That mix of near-term catalysts and medium-term pressure is important context for how the market is currently pricing the stock.

Analysis: why the NCLT update and results mattered together

Corporate actions that clear a regulatory or tribunal hurdle can have an outsized effect on sentiment because they reduce the probability of delays. When that kind of trigger lands alongside a results cycle showing profit growth, the market often responds more decisively, especially in a stock already seeing elevated discussion and trading interest.

The FY26 revenue number of Rs 10,701.2 crore, combined with the FY26 net profit of Rs 464.4 crore, provides a clearer base than quarterly revenue movement alone. Meanwhile, the $13-million engagement announced in April 2025 adds an additional reference point for deal momentum, even though the text does not quantify how it is being recognised in financials.

Conclusion

Sonata Software’s sharp intraday surge to Rs 308.85, alongside a steep jump in BSE volumes, followed a headline NCLT nod linked to an Encore IT merger. Recent earnings updates, including Q4 FY26 net profit of Rs 130.5 crore and FY26 net profit of Rs 464.4 crore on revenue of Rs 10,701.2 crore, have also been central to investor focus. The next set of company disclosures around merger steps and execution, along with subsequent quarterly updates, will likely remain key signposts for market participants tracking the stock.