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Result Synopsis

Tanla Platform (TANLA) reported mixed financial performance for the quarter. The sequential revenue growth was below estimates; while EBITDA margin was inline with expectation. It reported sequential revenue decline of 4.2% QoQ, led by 5.0% QoQ
decrease in the revenue of Enterprise business and 4.2% QoQ increase in revenue of Platform business. Trubloq processed 83bn message in Q4 with more than 60% volume market share. There was sequential increase in EBITDA margin(up 253 bps QoQ) led by improvement in the gross margin of enterprise business.

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 adoptionmof 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. We estimate revenue CAGR of 17.8% over FY23?25E with average EBIT margin of 21.0% over the period. We maintain our BUY rating on the stock with revised target price of Rs 1,004/share based on P/E of 18x on FY25E. The stock trades at P/E of 15.3x/12.3x on FY24E/FY25E.

Result Highlights

? Reported revenue of Rs 8,335mn (down 4.2% QoQ, down 2.3% YoY) in a seasonally weak quarter. Enterprise revenue was down 4.1% YoY (down 5.0% QoQ), while Platform business grew 18.6% YoY (up 4.2% QoQ).
? The gross margin for enterprise business grew from 17.9% in Q3FY23 to 20.0% in Q4FY23, while gross margin on Platform business remained flat at 96.0% for the quarter.
? Trubloq processed 83bn message in Q4FY23 v/s 82bn message in Q3FY23.
? EBITDA margin increased by 253 bps QoQ (down 165 bps YoY) to 19.9% for the quarter.
? PAT increased by 3.1% QoQ, supported by lower operating expenses.
? Cash & Cash Equivalents at Rs 7,116 million as of March 31, 2023.
? Declared a final dividend of Rs 4/- per share.

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