Target: ₹1,046

CMP: ₹670.75

Tanla Platform (Tanla) reported in-line financial performance for the quarter. It reported sequential revenue growth of 2.2 per cent q-o-q, led by 2 per cent increase in the revenue of enterprise business and 4.1 per cent q-o-q increase in revenue of platform business. Trubloq processed 8,200 crore message in Q2 with more than 60 per cent volume market share. There was sequential increase in EBITDA margin (up 101 basis points q-o-q) as operating margin has started recovering after getting adversely affected in Q1-FY23.

It is a credible play on the rising demand for CPaaS solutions across industries for achieving enhanced customer engagement. Also, increase in smartphone penetration and greater regulatory push towards mandatory SMS alerts would drive CPaaS market. The adoption of CPaaS based A2P messaging across industries continues to drive volume growth for both enterprise and platform segments of Tanla.

Rising share of higher margin platform segment would drive EBITDA margin of the company. We estimate revenue CAGR of 14.0 per cent over FY22‐24 with average EBIT margin of 18.2 per cent over the period. We maintain our Buy rating with revised target price of ₹1,046/share based on P/E of 22x on FY24.