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Buy Tanla Platform; target of Rs 1046: YES Securities

YES Securities is bullish on Tanla Platform has recommended buy rating on the stock with a target price of Rs 1046 in its research report dated January 23, 2023.

January 25, 2023 / 05:24 PM IST
 
 
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YES Securities' research report on Tanla Platform

Tanla Platform (TANLA) reported inline financial performance for the quarter. Both, sequential revenue growth and EBITDA margin were inline with estimates. It reported sequential revenue growth of 2.2% QoQ, led by 2% increase in the revenue of Enterprise business and 4.1% QoQ increase in revenue of Platform business. Trubloq processed 82bn message in Q2 with more than 60% volume market share. There was sequential increase in EBITDA margin(up 101 bps QoQ) as operating margin has started recovering after getting adversely affected in Q1FY23. It is a credible play on the rising demand for CPaaS solutions across industries for achieving enhanced customer engagement. Also, increase in smartphone penetration and greater regulatory push towards mandatory SMS alerts would drive CPaaS market. As per industry reports, the Global CPaaS market is expected to grow at CAGR of 29% 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. Rising share of higher margin platform segment would drive EBITDA margin of the company.

Outlook

We estimate revenue CAGR of 14.0% over FY22‐24E with average EBIT margin of 18.2% over the period. We maintain our BUY rating on the stock with revised target price of Rs 1,046/share based on P/E of 22x(unchanged valuation multiple) on FY24E. The stock trades at P/E of 20.1x/14.2x on FY23E/FY24E.