Multibagger Small Cap Stock Declined 60% In 1-Year, Geojit Sees 26% Return: Buy

Geojit has recommended investors to buy Tanla Platforms Ltd with a target price of Rs 920 apiece. The current market price of the stock is Rs 729 apiece implying an upside of 26%.

Tanla Platforms is the largest CPaaS player in India, with a market share of ~40% and handling 800 billion interactions annually. The company has a market capitalisation of Rs 9899 crore. The shares of the company are trading at 65% discount from 52-week high. Check key details below:

1. Tanla Platforms Ltd Stock Outlook & Return

The last trading price of the stock is Rs 729 apiece with an intraday decline of 2.96%. The stock's 52-week high is Rs 2094 and 52-week low is Rs 584 apiece. The stock has declined 60% in last 1-year. The shares have given return of 1019% in last 3-years and 1912% in last 5-years.

2. Strong Growth In CPaas Industry Drives Revenue

Tanla is anticipated to continue its revenue growth on the back of robust demand for digital interactions across industries which is favourable for CPaaS players. CPaaS is forecasted to grow at a CAGR of 30% through FY20-2025E.

Furthermore, the government regulation on preventing unsolicited messages (Spam) to comply with TRAI regulation, as well as the increase in mobile customer base, will benefit India's largest CPaaS player.

3. Strong Growth From Platform Business, Wisely

The management anticipates an increase in revenue from Platform business, including Trubloq and newly Wisely platform. Wisely is a cloud based, blockchain enabled platform, providing data privacy & security, trackability with lower latency and better scalability.

The management expects to see gross margin of roughly Rs.100 cr in an annualized basis during FY23.

4. Valuations & Outlook

According to Geojit, "Due to product price disruption, stock appears reasonable and currently trades at a PE of 17x on FY25E, which is less than its 5-year average (5 Yr Avg = 27x). We expect earnings to grow at a 21% CAGR during FY23-25E. Hence, we value Tanla at 19x FY25E with a target price of Rs. 920 per share and recommend a Buy rating."

Tanla has a healthy balance sheet with an accumulated net cash of Rs 808 cr in FY22 and a debt-to-equity ratio of 0.03x during FY25E.

5. About Tanla Platforms

Tanla Platforms Ltd. is the largest Communication Platform as a Service (CPaaS) player in India. Tanla has two major business: Enterprise and Platform, both using blockchain technology to reduce spam and fraud activities and make it easy to integrate with enterprise applications.

Disclaimer

The stock has been picked from the brokerage report of Geojit. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.