Up 12,000% in 10 years despite recent crash! HereтАЩs what to do with this solid wealth creator
One of the biggest wealth creators of the past decade just dropped over 60 per cent on Dalal Street in the ongoing calendar year till December 22. Shares of the company cracked to Rs 707.80 on December 22, 2022 from Rs 1,888.45 on December 31, 2021. Select market watchers believe that operational headwinds which led to falling in margins in the first half of FY23 weighed sentiment. On the other hand, the scrip is still up nearly 12,000 per cent since December 2012.
This is Tanla Platforms, the largest Communication Platform as a Service (CPaaS) player, with a market share of around 40 per cent and handling 800 billion interactions annually.
The company has transitioned from an application-to-person (A2P) service provider to a full CPaaS provider through inorganic growth. TanlaтАЩs strategy of acquiring Karix found success, considerably expanding TanlaтАЩs CPaaS capabilities and driving enterprise business. Tanla provides services to large players in various industries, including BFSI, e-commerce, healthcare, travel, social media, and the government of India.
Financials
For the half year ended September 30, 2022, the companyтАЩs consolidated operating profit declined nearly 11 per cent to Rs 285.79 crore. Net profit slipped 12 per cent YoY to Rs 210.86 crore during the same period. On the other hand, the company’s net sales increased 12.47 per cent YoY to Rs 1,651.19 crore during April-September 2022.
The debt-free company had a healthy balance sheet with cash and cash equivalent of over Rs 800 crore as of March 31, 2022.
тАЬDue to operational headwinds, EBITDA margins squeezed in H1FY23, which is expected to improve during coming quarters by measures to minimising currency volatility in the earnings,тАЭ Geojit Financial Services said in a report.
There are expectations that the CPaaS industry is expected to grow at a CAGR of 30 per cent in FY20-2025E due to higher government regulation on messages and a rise in the mobile customer base.
The management anticipates an increase in revenue from platform businesses, including Trubloq and Wisely platform. Wisely is a cloud-based, blockchain-enabled platform, that provides data privacy and security, trackability with lower latency and better scalability. The management expects to see gross margin of around Rs 100 crore on an annualised basis during FY23
тАЬTanla is anticipated to continue its revenue growth on the back of robust demand for digital interactions across industries which are favourable for CPaaS players. The government regulation on preventing unsolicited messages (spam) to comply with TRAI regulation, as well as the increase in mobile customer base, will benefit IndiaтАЩs largest CPaaS player,тАЭ Geojit Financial Services said.
Valuation and stock outlook
Analysts hold mixed views on Tanla Platforms amid the ongoing selling in 2022. Geojit Financial Services further added that due to product price disruption, shares of the company seem reasonable and currently trade at a price-to-earnings (PE) of 17 times on FY25E, which is less than its 5-year average of 27x.
тАЬWe expect earnings to grow at a 21 per cent CAGR during FY23тАУ25E. Hence, we value Tanla at 19 times FY25E with a target price of Rs 920 per share and recommend a Buy rating,тАЭ Geojit Financial Services said.
On the other hand, Manoj Dalmia, Founder and Director, Proficient Equities, said, тАЬThis stock is currently in a consolidation phase, and there is no clear trend, therefore investors should avoid fresh buying for now.тАЭ
A R Ramachandran from Tips2trades, said a strong sell-off in frontline IT stocks continued which had a rub-off effect on midcap and smallcap IT stocks, like Tanla platforms.
