Sonata Software's shares gained sharply after the National Company Law Tribunal (NCLT), Chennai Bench, approved the scheme of amalgamation between the company and its wholly owned subsidiary, Encore I.T. Services Solutions Private Limited. The tribunal sanctioned the merger on June 5, 2026, with the order becoming public on June 11, 2026.

Under the approved scheme, Encore IT Services Solutions will be merged into Sonata Software and dissolved without undergoing the process of winding up. Since Encore is a wholly owned subsidiary, no new shares will be issued as part of the transaction, resulting in no equity dilution for existing shareholders.

According to the merger rationale, the amalgamation is intended to streamline the group's corporate structure, consolidate operations under a single entity, reduce administrative and regulatory compliance requirements, and eliminate duplication of costs. The company expects the integration to enhance operational efficiency and improve resource utilization across the business.

The tribunal also directed that employees of the transferor company will continue their employment with Sonata Software without interruption of service. The scheme will become effective upon filing the certified copy of the NCLT order with the Registrar of Companies.

Investor sentiment was further supported by expectations that the simplified structure could strengthen operational synergies and improve management focus, contributing to the sharp rally in Sonata Software's stock.