Buy Tanla Platforms; target of Rs 920: Geojit

Geojit's research report on Tanla Platforms

Tanla Platforms Ltd. is the largest Communication Platform as a Service (CPaaS) player in India. Tanla has two major business: Enterprise and Platform, both using blockchain technology to reduce spam and fraud activities and make it easy to integrate with enterprise applications. Tanla Platforms is the largest CPaaS player in India, with a market share of ~40% and handling 800 billion interactions annually. The CPaaS industry is expected to grow at a CAGR of 30% in FY20-2025E due to higher government regulation on messages and rise in mobile customer base. Tanla has a healthy balance sheet with an accumulated net cash of Rs 808 cr in FY22 and a debt-to-equity ratio of 0.03x as of FY23E . The drop in revenue witnessed in H1FY23 is likely to normalize in the coming quarters on the improvement in volumes from new clients on rising transactions from Wisely (New CPaaS Platform) along with an increase in realisation from existing customers and measures to improve margins by minimising currency volatility. Due to product price disruption, stock appears reasonable and currently trades at a PE of 17x on FY25E, which is less than its 5-year average (5 Yr Avg = 27x).

Outlook

We expect earnings to grow at a 21% CAGR during FY23–25E. Hence, we value Tanla at 19x FY25E with a target price of Rs. 920 per share and recommend a Buy rating.

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Tanla Platforms - 21 -12-2022 - geo