The stock of Tanla Platforms, India's largest Communications Platform as a Service (CPaaS) company, has been under pressure in the near term. The stock has lost over half of its investor wealth in the last 1 year to currently trade around ₹678 apiece. However, despite the recent correction, brokerage house HDFC Securities sees the stock crossing ₹1,000 in the next 1 year.
The brokerage has a ‘buy’ call on the stock with a target price of ₹1,050, indicating an upside of 55 percent.
In the March quarter, the brokerage noted, that margin recovery in the enterprise segment came as a positive surprise. The enterprise revenue declined 5 percent QoQ, owing to seasonal and soft promotional volume but the platform revenue grew 4.1 percent QoQ led by Wisely Network and OTT platform, it informed.
According to HDFC Securities, the enterprise business growth will be volume led and the proposed National Long Distance (NLD) rate hike will act as a booster. Also, the platform segment growth will be powered by Wisely platforms, it said.
"Wisely ATP (anti-phishing product) is a promising product, which has received Sandbox approval from TRAI and is under POC with large banks. Wisely Network and OTT (WhatsApp) have started yielding results, while Wisely Communicate (encrypted OTP) and Wisely Engage (performance marketing) are future drivers," it stated.
The EBITDA margin has recovered over 20 percent levels in Q4, given price negotiations with telcos and reduced input costs and now the brokerage expects improved margins for FY24E and has revised its EPS estimate upward by 2.6 percent and 3.3 percent for FY24E and FY25E, respectively.
It also estimates 18 percent and 23 percent revenue and EPS CAGRs over FY23-25E, led by a rise in revenue and gross profit CAGRs for the platform and enterprise segments.
The company reported a 14.44 percent decline in its net profit in the March quarter at ₹120.3 crore as against ₹140.60 crore in the corresponding quarter last year. Its revenue for the quarter also fell 2 percent to ₹833.5 crore versus ₹853.5 crore in the year-ago period.
For the full financial year FY23, the company’s net profit was down 17 percent to ₹447.6 crore as against ₹539.2 crore in FY22. Meanwhile, its revenue for FY23 came in at ₹3,354.3 crore versus ₹3,206 crore in FY22.
Uday Reddy, Founder Chairman & CEO, Tanla Platforms Limited, said, “Our innovation engine is firing with Platform business gross profits growing over 20 percent YoY for 11 quarters in a row. Our Enterprise business is back to 20 percent gross margins and we are well positioned to grow in the coming year."
Stock price trend
While Tanla has shed over 52 percent in the last 1 year, and over 55 percent from its 52-week high of ₹1,509.05, hit in April 2022, the stock has given multi-bagger returns in the long term.
It has skyrocketed over 15445 percent in the last 10 years and over 1700 percent in the last five years. From its COVID-low of ₹37, hit in March 2020, as well, the stock has jumped 1722 percent till date.
2023 has also been a very volatile year for the stock till now, swinging between gains and losses. It has lost over 5 percent this year so far. While the stock surged 29 percent in April, it fell 22.5 percent in March. Similarly, it gained 4.5 percent in February after a 9.5 percent decline in January.
Tanla Platforms Limited, previously known as Tanla Solutions Ltd, is a cloud communications company based in Hyderabad, India. The company provides value-added services in the cloud communications space. Tanla has offices in ten locations including Singapore, London, Colombo, Dubai, etc. The company operates with a team of more than 500.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.