Brokerage house Yes Securities expects Tanla Platforms to rise nearly 60 percent after a sharp fall in the last one year. The stock lost over half of its investor wealth in the last 12 months.
The brokerage has a 'buy' call on the stock with a target price of ₹1,046 per share, implying a potential upside of 59 percent. In the last 1 year, the stock has fallen 62 percent, while it has tanked nearly 70 percent from its all-time high of ₹2094.00, hit on January 17, 2022.
The stock has lost 7 percent in January so far, extending losses after a nearly 10 percent decline in December. 2022 was a weak year for the stock, with it falling straight for the first 7 months. Overall, in 2022, the stock shed 59 percent.
It has given negative returns in all months of 2022, except August. The scrip shed over 30 percent in July on the back of weak earnings.
Despite the massive correction recently, the stock has been a long-time favourite for long-term investors, giving over 10,000 percent returns in the last 10 years.
The company's consolidated net profit dropped 26.3 percent year-on-year (YoY) to ₹116.51 crore in the quarter ended December 2022 (Q3FY23). The firm reported a profit of ₹158 crore in the same quarter last year. Its revenue also fell nearly 2 percent YoY to ₹869 crore versus ₹885 crore in the year-ago period.
Consolidated EBITDA declined by 25 percent YoY to ₹151.3 crore in Q3FY23 from ₹202.8 crore posted in Q3 FY22. EBITDA margin stood at 17.4 percent in Q3 FY23.
The company's revenue from the Platform business was at ₹78.2 crore (up 19 percent YoY) whereas revenue from the Enterprise business stood at ₹791.4 crore (down 3 percent YoY) during the period under review.
Uday Reddy, founder chairman & CEO, Tanla Platforms, said, “Wisely is scaling up well and contributed 35 percent of our platform gross profit in the quarter. Our enterprise business is showing steady recovery with sequential improvement.”
Tanla Platforms, one of the world's largest CPaaS (Communications Platform as a Service Guide) players, processes more than 800 billion interactions annually and about 63 percent of India's A2P (application to person) SMS traffic is processed through its distributed ledger platform.
Why is Yes Securities bullish?
Post the earnings, Yes Securities said that Tanla reported inline financial performance for the quarter. Both, sequential revenue growth and EBITDA margin were in line with estimates.
As per the brokerage, Tanla is a credible play on the rising demand for CPaaS solutions across industries for achieving enhanced customer engagement. Also, an increase in smartphone penetration and a greater regulatory push towards mandatory SMS alerts would drive the CPaaS market.
As per industry reports, the Global CPaaS market is expected to grow at a CAGR of 29 percent from CY20 to CY25E, led by faster adoption of multichannel communication. The adoption of CPaaS-based A2P messaging across industries continues to drive volume growth for both enterprise and platform segments of Tanla, it pointed out. The rising share of higher margin platform segment would drive the EBITDA margin of the company, added the brokerage.
It estimates a revenue CAGR of 14 percent over FY22‐24E with an average EBIT margin of 18.2 percent over the period.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.