Tanla Platforms share price: HDFC Sec sees suggests buy with four-digit target
3 min read 24 Oct 2022, 06:48 PM ISTThe stock which currently is performing less than ₹800 apiece has the potential to rise up to the ₹1,000 mark in the next few months. Tanla is already a multi-bagger stock with gains of nearly 3-folds in the past two years.
PremiumDue to better-than-expected performance in Q2 results coupled with a share buyback plan, experts are optimistic about the Hyderabad-based cloud communications company Tanla Platforms. The stock which currently is performing less than ₹800 apiece has the potential to rise up to the ₹1,000 mark in the next few months. Tanla is already a multi-bagger stock with gains of nearly 3-folds in the past two years.
During the muhurat trading hour, Tanla Platforms is trading around ₹788.75 apiece up by nearly 1% at around 6.27 pm on BSE. The stock has hit a high of ₹793.20 apiece in the intraday trade.
At the current market price, Tanla's valuation is nearly ₹10,695 crore on Dalal Street.
Last week, on Friday, Tanla shares closed at ₹781 apiece on BSE. The company announced its financial performance for the quarter ending September 30, 2022 (Q2FY23) on October 20.
In Q2 of FY23, on a standalone basis, Tanla garnered a net profit of ₹120.71 crore --- rising by multifold from ₹34.57 crore in Q2FY22 and ₹17.60 crore in Q1FY23. Revenue from operations, however, stood lower at ₹284.27 crore in Q2FY23 versus ₹294.36 crore in Q2FY22 and ₹323.32 crore in Q1FY23.
On a consolidated basis, the company's PAT was at ₹110.44 crore, and revenue from operations was at ₹851.04 crore in Q2FY23. While PAT soared sequentially however dipped year-on-year, on the other hand, revenue was better on both qoq and yoy basis.
Uday Reddy, Founder Chairman & CEO, of Tanla Platforms Limited, said, “Our significant investments in Wisely, the platform of platforms for digital interactions is seeing strong traction and we are accelerating our Go-to-market efforts. Our focus on ESG was recognized by our S&P Global ESG score where we ranked in the top 93-94 percentile of the industry".
The company has announced a share buyback plan not exceeding ₹170 crore at a price of ₹1,200 per share. The company has fixed October 25 as the record date for the buyback.
Should you buy Tanla shares?
According to the HDFC Securities report, Tanla reported better-than-expected revenue and the margin was slightly better than our estimate. The enterprise business recovered (+6% QoQ), led by volume growth, ILD price increase, and seasonality, offset by ramp-down in one large domestic account.
Further, the stock brokerage's note said, "The full effect of the ILD price increase will be visible in Q3 and the impact of the decline in the large account is over, leading the way for healthy growth in enterprise business. The enterprise gross margin improved 82bps to 17.2% (vs our estimate of 17.1%) and management expects an exit range of 18-19% for the fiscal."
Also, the note explained that the platform business delivered strong growth, led by Trubloq and the ramp-up of the new Wisely platform (Wisely communicate and OTT). The investment in the Wisely platform ( ₹1.23 billion) is yielding results and the target is to reach ₹1 billion gross profit (~34% of the FY23E platform gross profit).
The success of the Wisely platform is seen as key for growth acceleration and rerating of the stock.
On valuation, HDFC Securities note said, "We are building in margin recovery but expect it to be lower than the historical level. We cut our EPS estimate by 1.9/1.7% for FY23/24E due to a ~30bps margin cut. We have a BUY rating with a TP of ₹1,000, based on 22x June-24E EPS, led by ~15% revenue CAGR and RoE of ~30%. The stock is trading at 22/18x FY23/24E EPS (~30% lower than the 5Y average)."
In 2 years, Tanla shares have climbed by 172.60% or 2.72 times on D-Street. The stock was near ₹286 level on October 23, 2020.
In August this year, Tanla announced an interim dividend of 600% aggregating to ₹6 per equity share for FY23. In FY22, the company paid a 200% dividend amounting to ₹2 per share for its shareholders.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
