Fundamental Analysis Of Tanla Platforms: Have you ever thought about who connects you to enterprises and developers for communications or verifications? There are companies that provide communications platform as a service (CPaaS) that enable real-time communication features (like voice, video, and instant messaging) to be directly embedded into proprietary apps and software.

In this Fundamental Analysis Of Tanla Platforms, we perform an in-depth analysis of its business, industry, financials, future plans & more

Fundamental Analysis Of Tanla Platforms

Company Overview

Tanla Platforms Limited was established in 1999 as a bulk SMS provider in Hyderabad, India. Today they are among the largest Cloud Communication providers in the world.

They are continuously enhancing the speed, ease & simplicity of their cloud solutions innovating the way the world communicates.

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Tanla platforms enable accessibility, provide data security and data privacy, and curb spam and scams for consumers. They are included in indices such as the Nifty 500 and BSE 500, Nifty Digital Index, FTSE Russell, and MSCI. 

Tanla’s revenues are derived from its digital platforms and enterprise communications businesses. They have developed TRUBLOQ -Developed the world’s largest blockchain-based platform to prevent spam and Wisely – an AI/ML platform for curbing smishing.

It is a player of choice in India across industry leaders and serves 2000+ enterprises in India with a market share of 35% in CPaaS, 45% NLD (SMS) market share, and 15% market share in WhatsApp. It is a choice for 3/4 of top Indian telcos 9/10 of banks, 8/10 of financial services, 7/10 of healthcare, FMCG, Digital Natives, and many government projects.

It has a presence in North America, Europe, SEA & Middle East and serves marquee tech giants and large Indian enterprises.

Industry Overview

The Indian economy has recovered from the pandemic era and shows great confidence. The World Bank estimates India’s GDP growth rate to be 6.9% in FY23 and 6.3% in FY24, contributing almost 17% to the global growth. The domestic demand and capital investment accounts for this growth. 

The digital communication & interaction market is large and growing. The total addressable market (TAM) for the CPaaS (Communication Platform as a Service) should be around USD 5-6 billion in India by 2027. Considering emerging regions like the Middle East and Southeast Asia, the potential market could reach around USD 11 million. 

Tanla Platforms – Financials

Let’s look at the important financial results and ratios of Tanla Platforms.

Revenue & Net Profit

The financial statement of the company indicates that the revenue has increased by 4.6 percent from ₹ 3206 Crores to ₹ 3355 Crores from FY22 to FY23 respectively. On a 4-year CAGR basis company grew by 35.20 percent. The increase in revenue was mainly driven by increased wallet share from their existing business, change in ILD pricing, growth in WhatsApp and other channels, new customer additions, and the creation of a new revenue stream Trubloq. 

Though the revenues have increased, the net profits of the company have decreased by 17 percent from ₹539 Crores in FY22 to ₹448 Crores in FY23. On a 4-year CAGR basis the company has grown by 96.58 percent. The reduction in profits in FY23 was mainly due to the decrease in gross profit, and an increase in operating costs, as well as depreciation and amortization expenses.

The loss in FY20 was primarily on account of accelerated depreciation provided on redundant technology assets on moving operations to the cloud and to comply with regulatory changes to move to blockchain technology.

Fiscal YearRevenue from operations (In Crores)Net Profit (In Crores)
20233354.55447.65
20223205.97539.28
20212341.47356.14
20201942.84-211.17
20191003.9629.82
4-year CAGR35.2%96.58%

Profit Margins

Tanla reported a 4.3 percent fall in operating profit margin (OPM) and a 3.48 percent fall in net profit margin (NPM) from FY22 to FY23. The fall was consistent with the net profits. Though there has been a fall in profit margins, the margins were able to beat the 5-year average of 15.45 percent and 7.52 percent respectively.

The margins were affected by pricing pressure in the enterprise communications business.

Fiscal YearOperating Profit MarginNet Profit Margin
202317.59%13.34%
202221.89%16.82%
202118.56%15.21%
20209.58%-10.78%
20199.65%3%
5-year average15.45%7.52%

Return Ratios

Return on Capital Employed faced a significant fall by 20.55% from 60.27% in FY22 to 39.71% in FY23 but considering the 5-year trend, the RoCE has increased by almost 35%. On a 5-year average basis, ROCE stands at 25.25%. 

Return on Equity reported a 16.67% fall from 48.23% in FY22 to 31.56% in FY23. Considering a longer perspective, RoE has almost increased by 26%. On 5 year average basis, RoE stands at 19.87%. 

The decline in return on equity and return on capital employed was mainly due to a 17% decrease in profits for FY23 in comparison to FY22. 

Fiscal YearRoCERoE
202339.71%31.56%
202260.27%48.23%
202152.30%45.02%
2020-30.67%-29.79%
20194.65%4%
5-year average25.25%19.87%

Leverage Ratios

Tanla Platforms has a debt-to-equity ratio of 0 times for the last four financial years. The company became a debt-free company on March 31, 2020.

Key Metrics – Tanla Platforms

ParticularsAmountParticularsAmount
CMP1,088Market Cap(Cr)14,906
EPS38.28Stock P/E28.96
RoE31.56%RoCE39.71%
Promoter Holdings44.16%FII Holdings15.15%
Debt to Equity0P/B7.09
Operating Profit Margin19.51%Net Profit Margin14.13%

Share performance of Tanla compared with select Indices

Tanla Platforms – Future Plans

  • Tanla has plans to significantly increase its international presence in both Enterprise Communications and Digital Platforms businesses.
  • With the acquisition of ValueFirst, expansion opportunities have opened up in the Southeast Asia region. This allows them to enter the international CPaaS market, estimated to be valued at over ₹ 200 billion.
  • Achieve Net Carbon Neutrality by 2025.
  • Certification of all office locations and data centers with ISO 14001 by 2025.
  • Working towards creating a safer, more secure environment for millions of users.

Conclusion

As we conclude the article “ Fundamental Analysis Of Tanla Platforms ” we have understood its business, how it performed in the last five years, and what are its future plans. Further analysis is necessary to understand the risk & return characteristics and suitability before investment. Would love to hear your thoughts about Tanla Platforms in the comment section below.

Written By Ashish Agarwal

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