Buy Tanla Platforms Ltd For Target Rs.1,198 By Geojit Financial Services Ltd
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Dual engines to drive revenue
Tanla Platforms Ltd. is the largest Communication Platform as a Service (CPaaS) player in India. Tanla has two major businesses: Enterprise and Platform, both using blockchain technology to reduce spam and fraud activities and make it easy to integrate with enterprise applications.
* The revenue grew by 10% YoY, reaching Rs.1,002.2cr, primarily fuelled by OTT channels.
* EBITDA improved by 3.5% to Rs.188.6cr on a YoY basis due to a consolidation benefit from Valuefirst India.
* We expect improved revenue in FY25 on new client additions, increased realisation from new and existing customers, and an improvement in volume from OTT business.
* The company won two deals, one with a global tech leader with Wisely ATP and another one with Google RCS, which will enhance revenue visibility in FY25E.
* Therefore, we retain our Buy rating with a revised target price of Rs. 1,198 at a PE of 21.5x FY26E adj. EPS.
OTT business propelled the top line
In Q1FY25, revenue improved by of 10% YoY, reaching Rs.1,002.2cr, primarily supported by enterprise business. Segment-wise, the enterprise business, which accounts for 91% of revenue, grew (11% YoY), led by the growth of OTT channels and Valuefirst. Simultaneously, the digital platform witnessed a de-growth of 1.2% YoY, largely due to loss in revenue from the Vi ILD messaging business, which is offset by improved revenue from digital platforms. The company began to earn revenue from Wisely ATP, but at a slower rate. There would be no major impact on the Vi in the next quarter onwards. The company is likely to complete the acquisition process of Valuefirst’s international business during the quarter
Valuefirst joins revenue stream
In Q1FY25, Tanla onboarded 121 new customers, out of which 19% were added on WhatsApp and contributed a revenue of 5.4cr during the quarter. The EBITDA improved by 3.5% to Rs.188.6cr on a YoY basis due to a consolidation benefit from Valuefirst India. While the EBITDA margin shrank to 18.8% (-119 bps) in Q1FY25. But bottom line PAT improved by 4.3% on a YoY basis to Rs.135.4cr with a PAT margin of 14.1%
Strategic move for riding the digital wave
The company is strategically shifting its focus towards OTT and gaining its market share and scaling of new platforms and opportunities. To compact scams on messages, a global technology major tied up with Tanla for Wisely ATP to prevent fraudulent messages. The company launched a new MaaP (Messaging as a Platform) product for Google Rich Content Service (RCS) and signed a deal with Vodafone Idea (Vi) to deploy the MaaP platform in India, and the revenue will kick in from Q2FY25. Looking forward, we expect the margin to improve on the back of higher profitability and improved volumes in both the enterprise & platform businesses.
Valuation
We expect revenue to grow at a CAGR of 16% in FY24–26E, relying on new client additions, increased realisation from new and existing customers, an increase in UPI transactions, and an improvement in volume from OTT business. The increasing adoption of the Wisely platform is expected to drive revenue and margin growth. The company won two deals, one with a global tech leader with Wisely ATP and another one with Google RCS, which will enhance revenue visibility in FY25E. Therefore, we retain our Buy rating with a revised target price of Rs. 1,198 at a PE of 21.5x FY26E adj. EPS.
For More Geojit Financial Services Ltd Disclaimer https://www.geojit.com/disclaimer
SEBI Registration Number: INH200000345
