Target: ₹920

CMP: ₹729.05

Tanla Platforms is the largest CPaaS player in India, with a market share of nearly 40 per cent and handling 800 billion interactions annually. The CPaaS industry is expected to grow at a CAGR of 30 per cent in FY20-2025 due to higher government regulation on messages and rise in mobile customer base.

The management anticipates an increase in revenue from Platform business, including Trubloq and newly Wisely platform. Wisely is a cloud based, blockchain enabled platform, providing data privacy & security, trackability with lower latency and better scalability

Tanla has a healthy balance sheet with an accumulated net cash of ₹808 crore in FY22 and a debt-to-equity ratio of 0.03x as of FY23E .

The drop in revenue witnessed in H1-FY23 is likely to normalize in the coming quarters on the improvement in volumes from new clients on rising transactions from ‘Wisely’ 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).

We expect earnings to grow at a 21 per cent CAGR during FY23–25. Hence, we value Tanla at 19x FY25 with a target price of ₹920 per share and recommend a Buy rating.