Buy Tanla Platforms, target price Rs 1600: HDFC Securities

HDFC Securities has buy call on Tanla Platforms with a target price of Rs 1600. The current market price of Tanla Platforms Ltd. is Rs 1515. Time period given by analyst is one year when Tanla Platforms Ltd. price can reach defined target.

Tanla Platforms Ltd., incorporated in the year 1995, is a Small Cap company (having a market cap of Rs 20334.13 Crore) operating in IT Software sector.

Tanla Platforms Ltd. key Products/Revenue Segments include Software Services for the year ending 31-Mar-2021.



Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 844.76 Crore, up 33.94 % from last quarter Total Income of Rs 630.68 Crore and up 43.67 % from last year same quarter Total Income of Rs 587.99 Crore. Company reported net profit after tax of Rs 136.17 Crore in latest quarter.

Investment Rationale
Tanla is expected to grow strongly, based on: (1) continued growth in enterprise messaging volumes; (2) increasing Trubloq platform volumes (higher margins); (3) scaling up of Wisely platform (developed by Tanla in partnership with Microsoft); and (4) up-selling and client addition. Over FY21-24E, the brokerage projects revenue/EBITDA/EPS CAGRs of +26/30/27%. It initiates coverage on Tanla with a TP of INR 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). The stock is trading at a P/E of 30/26x FY23/24E (~25% discount to listed peer).

Promoter/FII Holdings
Promoters held 42.51 per cent stake in the company as of 30-Sep-2021, while FIIs owned 14.93 per cent, DIIs 0.04 per cent.