Shares of Route Mobile and Tanla Platforms are among the top picks for investors in the cloud communications space. The companies are leading players in the Communications Platform as a Service (CPaaS) space and play a key role in expanding digital communication genre.They develop communication platforms for large organisations to connect with their customer base.
In terms of returns, Tanla Platforms shares have risen 1,509 per cent in three years and gained 2,220 percent in five years. However, Tanla Platforms shares are trading 64.66 per cent to their 52 week high of Rs 2094.40 hit on January 17, 2022. They hit a 52 week low of Rs 584.80 on July 27 this year. In the current trading session, the stock stood at Rs 740.20 on BSE. In the last one year, the stock is down 37.64 per cent and lost 60.8 per cent in 2022. Market cap of the firm stood at Rs 10,021 crore.
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On the other hand, Route Mobile shares were listed on BSE and NSE on September 21, 2020. Route Mobile shares made a strong debut delivering over 100 percent returns to its investors. Stock of Route Mobile listed at a premium of 102.28% above its IPO issue price of Rs 350 on BSE. Route Mobile share opened at Rs 708, gaining Rs 358 compared to its issue price. Compared to its listing price of Rs 708, the stock has surged 86.58 percent in two years.
In the current trading session, the Route Mobile stock was trading at Rs 1322 on BSE. It touched an intraday high of Rs 1337.35, rising 2% on BSE. In the last one year, the stock is down 32.26 per cent and fallen 32.26 per cent in 2022. Market cap of the firm stood at Rs 8,260 crore.
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In terms of earnings, Route Mobile reported a strong set of numbers for the quarter ended September 2022. The enterprise messaging firm posted a 74.5 per cent rise in consolidated profit after tax at Rs 73.6 crore in Q2 against a profit after tax (PAT) of Rs 42.17 crore in the corresponding period a year ago. Revenue from operations zoomed 94 per cent to Rs 845.84 crore from Rs 435.67 crore in the September 2021 quarter.
On the other hand, earnings of Tanla Platforms were tepid in the last quarter. Net profit declined 18.89% to Rs 110.45 crore against Rs 136.17 crore during the quarter ended September 2021. Sales climbed 1.12% to Rs 851.04 crore in Q2 against Rs 841.62 crore during the quarter ended September 2021.
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Here’s a look at what analysts said about the prospects of stocks of the two firms engaged in cloud communications.
Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking Ltd is bullish on Tanla Platforms.
“Among the Communications Platform as a Service (CPaaS) space, Tanla Platforms technically seems well placed as prices have corrected substantially from the high to the extent of 61.8% retracement of the entire rally since March 2020 and is presently flirting around its historical support level of Rs 725-750. Thus, it offers fresh entry opportunity with favourable risk reward scenario. Previously, the said level has provided a decent pullback in the stock, and it can be expected that history might repeat itself and higher levels of Rs 1,075 (50% retracement) followed by Rs 1310 (38.2% retracement) can be seen in near term, said Das.
“Present price consolidation is well supported by volume where present average daily volume has crossed the 30-day average thus further validates of positive biasness in the stock. Presence of bullish positive divergence in weekly time frame reinsures that a pullback is eminent,” added Das.
Abhijeet from Tips2trade said, “After a phenomenal run during the pandemic where mid and small cap IT stocks gave multibagger returns, expectedly they have also borne the brunt of a global tech rout where correction of more than 40 per cent from their all-time highs have been seen in some stocks like Tanla Platforms and Route Mobile. Fundamentally and technically, Tanla Platforms is comparatively more undervalued than Route Mobile with a lower PE & better Return on capital employed. Investors can buy Tanla Platforms if it closes above Rs 875 on daily charts for targets of Rs 1005-1065 in the near term. Route Mobile should be bought only if daily close is above Rs 1435. Targets can be Rs 1,548- Rs 1,724 in the near term.”
Jitendra Upadhyay, senior equity research analyst at Bonanza Portfolio is bullish on Tanla Platforms with a target price of Rs 960.
“The global CPaaS industry is expected to grow at a 27.5% CAGR over FY21-24E and on account of the addition of enterprise clients, continued growth in enterprise messaging volumes, increasing Trubloq platform volumes (higher margins) and the ability of wisely to scale with more partnerships, recent won a deal to handle WhatsApp traffic and development true caller offer Verified Business Caller ID solution for Karix’ customers and enterprises to enrich the user experience by fostering a communication ecosystem built on trust and safety. Deal wins with Vi and TrueCaller will contribute to revenue from Q2FY22. During Q1FY23, the Karix platform faced challenges during Q1FY22 and required infrastructure upgrade and cross currency headwinds these resulted in a short term impact on margin as per management expects to reach 20% EBITDA margin within two quarters,” said Upadhyay.
“The company has an excellent track record of identifying and acquiring entities that will enhance its platform and ecosystem capabilities. The company’s mergers and acquisitions strategy will ensure all additions augment our existing platform capabilities and are not made purely for the sake of revenue aggregation. The stock is supported by the company’s top quartile growth, higher return ratios of more than 40%, excellent cash generation, and free cash flow at Rs 221.7 crore and Cash and Cash Equivalents at Rs 862 crore. The stock is trading at a P/E of 20/17x FY23/24E a significant discount to its peers’ valuations. We recommend a BUY rating on the stock with a target price of Rs 960, implying an upside potential of 21 per cent from the current market price of Rs 793,” added Upadhyay.