Buy Tanla Platform; target of Rs 1382: YES Securities

YES Securities' research report on Tanla Platform

Tanla Platform (TANLA) reported broadly inline financial performance for the quarter. The sequential revenue growth and EBITDA margin were slightly above expectation. It reported sequential revenue growth of 10.7% QoQ, led by 10.9% QoQ increase in the revenue of Enterprise business and 8.4% QoQ increase in revenue of Platform business. Trubloq processed 80bn+ message in the quarter with more than 60% volume market share. There was sequential decrease in EBITDA margin(down 49 bps QoQ) on higher SG&A. 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 estimates, the Global CPaaS market is expected to grow at CAGR of 20% plus 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 25.8% over FY23‐25E with average EBIT margin of 19.2% over the period. We maintain our BUY rating on the stock with revised target price of Rs 1,382/share based on P/E of 22x on FY25E. The stock trades at P/E of 22.5x/17.0x on FY24E/FY25E.