Why Tanla Platforms Share Price is Rising

Nearly three years ago during the Covid period, companies underwent a massive transformation.

Many companies embraced digitalisation to attract new customers and adapt to the changing landscape.

This shift gave rise to a unique business model - one that helps companies in connecting with their potential clients.

Now, we are not only talking about marketing communications but also handling sensitive information like OTPs, emails, and every form of digital communication.

To fulfil these needs, companies like Tanla Platforms from the IT software sector emerged as the perfect solution, offering communications platform as a service (CPaaS) which helped companies in communicating effectively with their customers.

Let's understand their business models first.

So, companies like Tanla Platforms gather information from businesses and forward it to their customer base through telecom networks (like Airtel, Vodafone, Jio).

Not just that, they make sure every data is encrypted so that sensitive information cannot be leaked.

Surely, this appears to be an exciting business.

On Wednesday, 13 December 2023, Tanla Platforms share price broke out from a two-month consolidation, surging by 20% and getting locked in an upper circuit within a single trading session.

The bullish momentum continued on Thursday, 14 December 2023, as the stock rallied another 6% in early trade.

Let's find out why Tanla Platforms share price is rising.

#1 ValueFirst Deal Paying Off

If you remember, back in July 2023, the company acquired India's third largest CPaaS provider - ValueFirst Digital Media from Twilio for US$ 42 million (m) or Rs 3.5 billion (bn).

This deal proved to be highly profitable for Tanla Platforms as ValueFirst's strong presence in communication and customer experience management gave boost to the company's revenue.

The CEO of the company, Mr Reddy mentioned that ValueFirst made a considerable contribution to Tanla's revenue growth, generating an additional Rs 1 bn at a consolidated level.

After this acquisition, the company's market share increased to about 35% in CPaaS, out of which 8% was contributed by ValueFirst.

Not just that, the SMS market share also increased from 40% to more than 45%, here too, 8% was contributed by ValueFirst.

Due to ValueFirst, Tanla could accelerate its international business with strong momentum in Saudi Arabia, United Arab Emirates and Indonesia.

This strategic acquisition is paying off now and is helping the company grow faster than before. This could be the reason why the share price of Tanla is on the rise.

#2 WhatsApp and Emerging Channels are Fueling Growth

In the June 2023 quarter, the company reported a 37% year on year (YoY) growth in gross profit in the enterprise communications segment. This growth was primarily driven by the performance of WhatsApp.

Similarly, the digital platform gross profit saw a 29% YoY growth which was driven by the contributions of Trubloq and Wisely OTT.

It basically means that as the company's clients broaden their presence on digital channels, Tanla Platforms stands to gain.

For example, they currently facilitate engagement for 300 million SBI users over WhatsApp for their banking needs. Similarly, the company has facilitated cab booking through WhatsApp which will ensure a seamless consumer experience.

As digitalisation would take a step further, so will the growth of Tanla Platforms.

Overall, the company saw an impressive 3x YoY growth in market leadership of enterprise communication segment in the quarter gone by.

This growth was primarily from the success of WhatsApp and all of this is contributing significantly to the company's overall profits.

If we look beyond Whatsapp and other channels, Tanla Platforms earn profits as the number of digital transactions increases.

Let us tell you how...

You see, Tanla Platforms uses smart artificial intelligence and machine learning strategies to help banks send special offers based on how you use your card.

Here, the system of Tanla Platform learns from each transaction you make and sends useful deals based on your spending habits, location and the card you have used. This program has helped double the loyalty offers for the bank.

Similarly, Tanla Platforms also did some innovations for voice messages. If you are a bank customer and are at a location where text messages don't work well, Tanla Platforms makes sure that you still get your important code through a phone call.

These are just a few examples of how Tanla Platforms is making regular things, like OTP and notifications even better and helping businesses grow which will in turn, help them grow.

#3 Robust Quarterly Results

In the September 2023 quarter gone by, Tanla Platforms achieved its revenue milestone of Rs 10 bn for the first time.

Moreover, it saw a 19% growth in revenue.

This growth was contributed by revenue generated from digital platforms as the segment grew 27% YoY, while organic revenues grew 7% YoY.

The earnings before interest, tax, depreciation and amortisation saw a robust 41% increase to Rs 1,968 m from Rs 1,395 m. The EBITDA margin stood at 19.5% in September quarter, up 312 basis points, YoY.

The profit after tax (PAT) grew by 29% in the September quarter as compared to the same period last year.

The growth was impacted due to lower interest income and higher depreciation on intangible assets arising out of acquisition.

What's Next?

The management of Tanla Platforms is optimistic about its future. The company's CEO mentioned that they had increased domestic prices during the September quarter which led the gains of Rs 350 m.

He believes that this is just the beginning. The impact of the price increase would be more pronounced in the upcoming quarters as well.

How Tanla Platforms Share Price has Performed Recently

Tanla Platforms share price has gained over 19% in the last five days and more than 55% in the this year.

The company touched its 52-week high of Rs 1,317.7 on 24 July 2023 and its 52-week low of Rs 506 on 27 March 2023.

Promoters, Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs), all three, have increased their stake in the company during this September quarter as compared to the same period last year.

• Promoters have increased their stake by 0.4%
• DIIs have increased their stake by 0.6%
• FIIs have increased their stake by 2.4%

Explore the detailed shareholding pattern here.

About Tanla Platforms

Tanla Platforms is a technology company which offers cloud communications services which helps them communicate effectively with their customers.

Tanla's offers cloud communication solutions through messaging, and application-to-peer (A2P) messaging services.

The company makes use of artificial intelligence (AI), machine learning (ML), and more to ensure encrypted and reliable communication channels.

Tanla has established long term relationships with its clients, with over 50% of its top 50 customers having been loyal partners for more than 7 years. Moreover, it generates 48% of their revenue from its top 20 clients.

As the company is growing, more and more clients are seeking services of Tanla Platforms. In the first half of this financial year, it added 195 new customers.

To know more about Tanla, check out Tanla Platforms' financial factsheet and Tanla Platforms news and analysis.

You can also compare Tanla with its peers:

Tanla Platforms vs Route Mobile

Tanla Platforms vs L&T Infotech

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...