Tanla Platforms set to seal more partnerships as stock on upward trajectory

by 5paisa Research Team 30/09/2021

Tanla Platforms, a mid-cap technology company which enables businesses to communicate with their customers and stakeholders via cloud-based platforms, is going to announce two significant partnerships on its Wisely platform.

Wisely is a communication platform-as-a-service (CPaaS) that offers a digital marketplace for enterprises and suppliers. Tanla expects to launch Wisely globally in the first quarter of 2022.

Senior Tanla executives said at IIFL’s Invest India Virtual Conference that the company would leverage one of these partnerships to expand its footprint in conversational platforms and OTT (over the top) channels.

“Though we see some increase in competitive intensity in the Indian CPaaS space going forward, a favourable mix change towards the higher-margin platforms business should support overall margin in our view,” according to a note by IIFL Securities.

Outlook for Tanla Platforms

IIFL Securities has a ‘buy’ rating on the stock and forecasts 23% compound annual growth rate for earnings per share from 2020-21 through 2022-23. It also said that the stock looks attractive at a one-year forward price-to-earnings ratio of 22.4x.

The brokerage firm has a 12-month target price of Rs 1,121 a share on the company as against its current market price of around Rs 838 apiece. This means there is a potential upside of over 33%.

The company's share price has oscillated between a low of Rs 267 and a high of Rs 1,030 during the past year. 

The company closed 2020-21 with revenue of Rs 2,341.5 crore and a net profit of Rs 356 crore. It is projected to expand its operating margins from 18.5% to over 21% by 2023-24.

According to IIFL, the company would more than double its revenue in four years from Rs 1,942.8 crore in 2019-20 with the EBITDA margin also rising more than two-fold in the same period.

What’s driving Tanla’s business?

Tanla recently expanded its bouquet of services by acquiring Karix, the market leader in the Indian CPaaS space, and Gamooga, a marketing automation company, in 2019-20. It also recently launched Trubloq, a blockchain-based solution to filter spam text messages. Trubloq processes 62% of India’s SMS traffic.

Karix is estimated to have around 30% market share in the business, around the same as its three nearest peers ACL Mobile, Gupshup and ValueFirst combined.

Tanla has been working on driving partnerships, and even though it is yet to give further details on the two upcoming partnerships, IIFL believes these could add an extra leg to growth.

Wisely has been witnessing significant traction in India and Microsoft was already announced as the go-to-market partner for Wisely at launch. A large consulting firm is working with Tanla on the Wisely strategy to serve global markets and the CPaaS offering is expected to be rolled out fully in the next six months.

Tanla sees its addressable market growing at over 20% with existing Indian CPaaS market growing by 15% annually and the entry of new-age companies in ad-tech, ed-tech, fintech and gaming topping it up with an additional 5%.

The multiple use-cases of Trubloq and the above opportunities in conversational platforms and OTT channels would further expand the addressable market. The international opportunity will be in addition to these.

Separately, Tanla is building a 92,000 sq ft Innovation and Experience Centre in Hyderabad that is also likely to be operational by March. The centre would develop and showcase technologies and platforms to customers and partners.

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