Tanla Solutions in Q1FY2010 recorded a disastrous 39.6% q-o-q decline in its topline, on account of a number of factors.
The economic slowdown continues to negatively impact Tanla, with the UK market decline, in particular, leading to a deceleration in Aggregator revenues.
The company derives a significant portion of its revenues from the UK market and with the recession having an effect on premium messaging services, this led to significantly lower volumes.
Revenues of the Aggregator dropped this quarter by nearly 50% qoq to Rs44.2 crore (Rs87.6cr in 4QFY2009), and have come off by nearly 60% over the past two quarters.
At the CMP, the stock is trading at 8.8x FY2011E EPS. The company has delivered a disastrous performance in the quarter gone by, with all segments of the company, save Mobile Payments, registering massive declines in revenue.
Tanla has been affected in a major way, owing to the global slowdown, and over the past year, revenues have fallen nearly 50% and profits over 82%. Owing to this, we downgrade the stock to NEUTRAL.
We would observe the next quarter to see whether any improvement is likely in the company’s financial performance.
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