Sonata Software likely to achieve secondary gains from Thomas Cook's fall

PUNE: Midsize IT firm Sonata Software could be an indirect beneficiary of the collapse of British travel operator Thomas Cook UK. TCUK’s closest competitor is TUI, a Frankfurt, Germany headquartered travel firm which is among Sonata’s top two clients, as per analysts tracking the firm.
“While TUI has been directly impacted, Sonata could be a secondary beneficiary as this is likely to lead to an increased IT spend by TUI,” said Harit Shah, senior analyst, Reliance Securities.

“Amid this, shares of TCUK competitor TUI Group have surged as much as 16% in two days, immediately post the news of the collapse breaking out, reflecting the possibility that the company – the largest leisure, travel and tourism company in the world – is likely to benefit from this development. This augurs well for Sonata Software albeit indirectly, for whom TUI is among top two clients,” Shah said in a note earlier this week.

“TUI is likely to see increased profits as the company attempts to gain TCUK clients – and also short-term windfall profits as reports have emerged that TUI has substantially raised the cost of holidays for TCUK clients who are using it to find alternative flights for their travel plans,” he said. Sonata Software declined to comment on this as it needs prior approval from TUI to comment on client specific issues.

Amit Chandra, assistant vice president at HDFC Securities, said, “I think the impact will not be immediate. It’s not right to assume that TUI will increase its outsourcing to Sonata in a big way.”