Shares of cloud communications provider Tanla Platforms rose 5 percent in trade on May 4 but cooled off later to end 0.26 percent up at ₹1436.15.
The company released its March quarter (Q4FY22) earnings on Friday, April 29 after the market hours. In the next trading session on Monday, May 2, the stock ended 1.02 percent higher on BSE.
As per the company's filing on BSE, its revenue increased 32 percent year-on-year (YoY) to ₹853.1 crore while profit after tax (PAT) increased 37 percent YoY to ₹140.6 crore.
"Tanla continues its outstanding track record of growth with revenues going up 6 times in the last six years. FY22 was a year of financial and business milestones, and we are entering FY23 with strong momentum," said Uday Reddy, Founder Chairman & CEO, Tanla Platforms.
Brokerage see Q4 through different lenses
Most brokerage firms have 'buy' calls on the stock but they are divided on their view on the company's March quarter scorecard.
HDFC Securities believes the company reported a muted March quarter earnings, with both revenue and margin coming slightly below its estimate.
As highlighted by the brokerage firm, Tanla's revenue was down 3.6 percent quarter-on-quarter (QoQ) due to softness in the enterprise business (down 4.2 percent QoQ), offset by better platform performance (up 4.4/48.7 percent QoQ/YoY).
HDFC Securities believes the platform business (currently Trubloq) of the company will continue to deliver strong growth, with the launch of the Wisely platform. The two notable deals on the Wisely platform (Vodafone Idea and Truecaller business messaging partnership) provide revenue visibility.
"The gross margin profile of the company will improve, with increasing contribution from the higher-margin product business. The enterprise business, which was hit by seasonality and softness in top accounts, will recover, led by the addition of new customers," HDFC Securities said.
The brokerage firm expects the company's enterprise business to clock 15 percent volume growth and gross margin (GM) may be in the 20-21 percent range, led by higher investments and increasing competition.
"The platform business will clock 35 percent revenue CAGR with 90 percent GM. We maintain our earnings per share (EPS) estimate and assign a 'buy' rating with a target price of ₹1,900, based on 35 times FY24E EPS, supported by growth (nearly 20 percent) and RoE of more than 45 percent," said HDFC Securities.
Another brokerage firm YES Securities also has a 'buy' call on the stock with a target price of ₹1,867, citing inline performance on both revenue and margin front in the March quarter.
YES Securities highlighted that the fourth quarter generally has weak seasonality compared to the third quarter on account of several promotional campaigns in the December quarter, driving up A2P messaging.
"The Wisely platform coming live is a positive development and would drive revenue growth for the platform segment in FY23. It remains a leader in the CPaaS space in India, growing faster than the industry. The adoption of CPaaS-based A2P messaging across industries continues to drive volume growth for both enterprise and platform segments," YES Securities said.
The brokerage firm expects Tanla's EBITDA margin to improve going ahead led by the platform segment(higher gross margin) growing faster than the enterprise segment.
"We estimate revenue CAGR of 26 percent over FY22-FY24E with an average EBIT margin of 21.4 percent. We maintain a 'buy' Rating on the stock with a revised target price of ₹1,867 per share, based on 30 times FY24E EPS. The stock trades at PE of 23 times on FY24E EPS," said YES Sec.
Disclaimer: The views and recommendations made above are those of the broking companies and not of MintGenie.