HDFC Securities Recommends To ‘Buy’ This Stock For 15% Upside

Target Price

The Current Market Price (CMP) of Tanla Platforms (Tanla) is Rs. 1392. The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 1600. Hence the stock is expected to give a 15% return, in a Target Period of 1 year.

Company performance

The company’s enterprise revenue has increased 36.5/41.5% QoQ/YoY to Rs. 7.8bn in Q2, led by higher volumes and an increase in ILD rates. Platform revenue increased 12.6/90.2% QoQ/YoY to Rs. 0.6bn. The gross margin for enterprise/platform stood at 22.1/92.6% in the quarter. The working capital management has improved, leading to a strong CF conversion (OCF/EBITDA at 129/119% in FY21/H1FY22).

Comments by HDFC Securities

According to HDFC Securities, “Tanla’s enterprise messaging capabilities were strengthened by the acquisition of Karix (market leader in India CPaaS). It has emerged as an integrated CPaaS solutions provider with an asset-light business model in its new avatar (V2.0). We initiate coverage on Tanla with a Target Price of Rs. 1,600, valuing it at 30x FY24E EPS, supported by its top quartile growth, higher RoE of 44%, excellent cash generation, and net cash of INR 8.5bn (~5% of market cap).”

About the company

Tanla Platforms (Tanla) is a leading player in the fast-growing CPaaS market (22% CAGR), which is being led by increased online transactions. The company’s business model has changed several times in the past two decades, but it has found success in the Application-to-Person (A2P) messaging and platform business, which grew at 46% CAGR over FY15-21.

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.