by Welcome back to Traders Ideology,In this article, we’ll do the fundamental analysis of tanla platforms where we’ll cover its business profile leadership key strength competitors, and future growth and then we’ll cover the financials of the company, finally we’ll conclude if tanla platforms are fundamentally strong or not.
This is a sharp correction in the technology sector companies and that has made some of these technology companies available at attractive evaluation so today I want to discuss the business of a very fast-growing technology company that works on one of the hottest and the fastest growing technologies including blockchain cloud computing, machine learning, and so on.
Let me share some of the quick facts about this company since 2016 the revenue of this company has grown from 432 cr to 3001 cr so that’s 600 growth in last five years, and its profits have grown from 7 crores to 501 crores, and that seven thousand percent growth in last five years that’s an unbelievable journey so far and in this journey, the stock has generated more than 30 times return in five years.
Company is virtually debt free and has generated a free cash flow of 613 crores in last three years now you would be wondering if the stock has already gone up so much why am I even talking about it because the reason is that in spite of this exponential growth there’s a huge growth prospect for this company in the next five to ten years it has a market cap of around 23 000 crores.
Disclaimer: This article is only for educational purposes. I do not recommend buying or selling so please consult your advisor and do your own research before investing.
Also, Read: Fundamental Analysis of IRCTC & Fundamental Analysis of DMART
Introduction
founded in 1999. tanla platform is a cloud communication company based out of hyderabad tala platform basically works on c-pass technology that is a communication platform as a service.
Communication platform as a service is a cloud-based delivery model that enables enterprises to add voice, video, and messaging features to their existing business software using APIs.
c-pass allows enterprises to cherry-pick real-time communication features and embed them into their apps and services just to give you an idea c-pass technology is one of the fastest-growing technology in the telecom sector and it is expected to grow multiple times in the next few years.
Tanla was the first company to develop and deploy a2p smsc in India so a2p smsc stands for the app-to-person short message service center its purpose is to send sms on behalf of mobile users and to deal with bulk SMS from the application.
one of the simple use cases of this a2p smsc is otp service we all know how important the otps are especially when it comes to bank login or any transaction confirmation or any authorization and that’s where tala helps the enterprises in sending the bulk SMS and otps.
In fact, tanla platform was the technology partner of the Indian government during covid vaccination so the covid app that we use for vaccination use tanla service for otp now you can imagine the scale of tanla business.
Tanla processes more than 800 billion interactions annually and about 62 percent of India’s a2p SMS traffic is processed through its distributed ledger platform called triplock making it the world’s largest blockchain use case so 2021 has been a marquee year for tanla with the successful launch of two massive platforms two blocks and wisely.
Fundamental analysis of tanla platforms
Fundamental analysis of tanla platforms are as follows:
Products
- If you look at the product true block is the world’s first blockchain blockchain-enabled c-pass stack processing over 270 billion transactions so far recently tanla has partnered with Microsoft and launched a product called wisely in January 2021.
- It is a blockchain-enabled communication platform as a service offering built on microsoft azure it’s basically a unique marketplace for enterprises and suppliers wisely offers a global h2s network that delivers your private secure and trusted communication experiences.
- Tanla is the leader in the Indian c-pass industry with 42% revenue market share and around 800 billion interactions per year.
Business Segment
- If you look at the business segment of tanla it works with both enterprises as well as telecom operators for example enterprises uses tanla platform for SMS marketing two-factor authentication where the user gets the otp to login omnichannel communication wire SMS voice call chat apps email push notification and so on.
- Mobile operators use tanla for services like SMS a firewall that monitors your SMS traffic plug revenue leakage and product network from spam spoof and other abusers then it provides a to psmsc service that is app to person short message service center to telecom companies for a2p messaging.
- It is basically to send messages via the app.
Management
- If you look at the leadership its chairman and CEO are Mr uday reddy he is also the founder of the company so he is the chief architect of the growth making tala one of the largest publicly traded cloud communication companies.
- Mr. Uday who is MBA degree from manchester business school UK.
Key Strength
- If you look at the key strength of the company the last key strength is innovation.
- Innovation was the key reason for the exceptional growth of the tanla platform.
- It created tools that worked on the latest CPA’s technology and uses blockchain and other technologies like machine learning.
Competitiors
- If you look at the competitors tanla’s competitor in India is the route mobile.
- If you look at the future growth by 2023 the global c-pass industry is estimated to grow to 47 billion dollars by 2023.
Future Growth Prospects
- The Indian c-pass addressable market is expected to grow to 1.1 billion dollars the growth momentum would be driven by accelerated adoption of digital transformation by enterprises then increasing smartphone user base for commerce and communication and need for personalized and targeted communication driven by the omnichannel experience.
- Overall ninety percent of enterprises globally will adopt CPA’s driven growth in coming years in 2018. Tanla had acquired Karix mobile for 340 crores.
- Karix is a leading business cloud communication provider with a reach to over 1500 enterprise clients in various industries across the country with this transaction tanla became one of India’s leading enterprise cloud communication providers with top customers in banking, insurance, automotive, dth retail,and many other platforms.
- Tanla also acquired Gamooga which is a big data and AI driven omnichannel marketing automation platform which enables businesses personally engage with their users across channels including SMS, email, voice, website, app, and other leading channels.
- Gamooga is a marketing automation service provider for b2c the company moreover the last two latest products wisely and to block have immense growth potential triblock which is in blockchain platform has 63 % market share in India and it manages more than one billion transactions a day then wisely which is in partnership with Microsoft has already on boarded two of the top 10 Indian banks for secure and the critical notification.
- It has also entered with a multi-year partnership with Vodafone idea which is one of the largest deals in the c-pass industry globally tanla platforms would go live with solutions in February 2022.
- There are also two new partnerships that tell would announce soon in sometime in 2022, it is also in the final stage of rolling out its GTM which is go to market strategy for wisely globally, so the growth potential for tanla is not restricted only to India it would be global,.
- Tanla chairman and CEO Mr. Uday reddy says that we are not here for linear thinking we are here for large opportunities my team is just fired up to be the fastest-growing c-pass company at scale in the world, we are just getting started so you can understand the confidence level and the growing respect for tanla.
Tanla Platform Financials
Tanla Platforms Financials are as follows:
Revenue Growth
- If we look at the growth ratio, Tanla revenues have grown from 432 crores in FY 16 to 3001 corer by December 21.
- The consistent and exponential rise in the revenues over the last 5 years.
- The CAGR rate of growth is 40% which is exceptional.
Profit Growth
- Tanla profits have grown from 7 crores of FY 16 to 501 crores by December 21.
- There was a one-time fall in net profit in FY 20 due to a one-time adjustment in depreciation, the CAGR growth and profit is 110%, which is crazy.
- Now you can see how this company has grown crazily in the last 5 years.
- This was mainly due to their innovative products using the latest technologies.
- The one-time fall in profit was only due to high depreciation otherwise the operating profits were positive in FY 20.
ROE and ROCE
- If you look at the profitability, Tanla’s latest ROE is 24% and ROIC is 29.47%, which is good.
Debt to equity ratio
- It is a debt-free company, which is again brilliant. Hence on debt to equity, I would rate it 10 out of 10.
- Now you really find companies that are growing crazily and at such high profitability with zero debt, and that’s the recipe of a multi-bagger company. No wonder in the last 3 years Tanla’s share price has jumped more than 30 times.
Shareholding Pattern
- If we look at Tanla’s shareholding pattern its promoters have consistently increased shareholding in the company from 35.06% to 43.74%.
- FIIs have also increased their shareholding from zero to 13.46%.
- The most interesting aspect of the shareholding pattern is that in spite of a crazy jump in share price, promoters have consistently increased the shareholding in the company.
- Tanla has announced its quarterly results and its revenue is up 35% year on year and profits are up 68% year on year. So Q3 has again been a very good performance.
Conclusion
- In this article, we discuss the fundamentals of the Tanla Platform.
- The companies in the business of CPaaS (Communication Platform as a Service).
- It uses the latest technologies like blockchain, Cloud, Machine Learning, etc to provide services to both enterprises and telecom operators including SMS OTP, push notification, secure messaging, etc.
- Tanla is the leader in India’s CPaaS industry with a 42% revenue share, and this industry is growing fast.
- Tanla is growing both organically and inorganically with an acquisition.
- Its financials are looking rock solid with amazing growth and profitability and zero debt. companies promoters have consistently increased their stake in the company which shows the confidence of the promoter in the company.
- It is currently trading at around two p 1300 at a PE ratio of 35.75. Although a PE of 35.75 is normally considered high, but considering the fact that Tanla is growing rapidly, it would command a premium.
- The share has already corrected around 37% from its peak, and its PEG ratio is less than 1 which makes it attractive even at current levels.
- Any fall in this Stock would be an opportunity to buy on dips, but like I said, Please do your research before investing your money. I hope you find this article useful.
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