This is why investors are dumping Tanla Platforms stock

5paisa Research Team 5paisa Research Team 9th December 2022 - 12:26 pm

Hyderabad-based Tanla Platforms, which seeks to transform the way the world collaborates and communicates through its communication platform as a service (CPaaS) solutions, continues to get battered on the Dalal Street.

The company’s stock sank for the second consecutive day on Wednesday to touch a new low of Rs 584.80 apiece. The share price was down 19.5% in late afternoon trade at Rs 588.50 in a Mumbai market that was up 0.7%. The stock was also dumped by shareholders on Tuesday when it crumbled 20% to Rs 731 a share.

In all, the stock has now lost 40% of its value in the last one week and hit a new all-time low today. This is 75% below its peak touched in January.

What’s behind the selloff?

Founded in 1999, Tanla was the first company to develop and deploy A2P SMSC short message service in India. Today, as one of the world’s largest CPaaS players, it processes more than 800 billion interactions annually and about 63% of India’s A2P SMS traffic is processed through Trubloq, making it the world’s largest blockchain use case.

The company came up with poor numbers for the first quarter ended June 30. Revenues declined 6% sequentially to Rs 800 crore while net profit sank 40% to Rs 100.4 crore in the same period.

On a year-on-year basis, revenue shot up 28% but that didn’t help with earnings as margins took a hit and the net profit actually declined 4% from a year ago.

The EBITDA margin at 16% was much lower than recent 22-23% average. This was impacted due to market disruption, modernization of its legacy systems and foreign currency impact of the euro’s depreciation.

The enterprise business, which brings almost two-thirds of gross margins, saw segment margin declining to 16%. The platforms business, which commands a robust 96% margin but accounts for 35% of the gross mix, was stable.

Uday Reddy, Founder Chairman and CEO of Tanla Platforms, said, “Q1 had some operational headwinds in the Enterprise business, but we have our building blocks in place to accelerate our momentum in the coming quarters.”