Tanla Platforms surges over 12 per cent

Tanla Platforms experienced a notable surge in its stock price on May 13, 2025, rising over 12 per cent to Rs 557.00, despite broader one-day declines in the market. This uptick follows a block deal placed by the founder, Dasari Uday Kumar Reddy.

He acquired an additional 1.38 per cent stake in the company at an average price of Rs 470.15 per share from American Funds Insurance Series Global Small Capitalization Fund and Smallcap World Fund Inc.

At market open on May 13, Tanla's stock price stood at Rs 503.75. For today, its high stands at Rs 557.00 amid today's market fall.

About the company

Tanla Platforms is a CPaaS (Communications Platform as a Service) that facilitates customer communication for businesses through two main segments: Enterprise and Digital platform.

The Enterprise business primarily deals with bulk SMS services for large-scale enterprises. Although it's a high-volume segment, it is commoditized and operates on low margins.

In contrast, the Digital platform business offers secure messaging solutions via WhatsApp. Its Wisely ATP security tool filters spam and harmful messages, ensuring only high-priority messages reach customers.

While the Enterprise segment generates 91 per cent of Tanla's revenue, the Digital platform contributes the remaining 9 per cent. Despite its smaller size, the Digital platform boasts high margins, contributing 30 per cent of operating profits, thanks to premium pricing and low capital requirements.

What's the scenario with this small-cap?

The business is currently facing intense competition in the sphere with players like Twilio, MessageBird, Infobip, and countless others - all vying for market share. Also, margins are thinning in the face of headwinds, pricing pressure, and a decline in volumes in its enterprise segment - the major revenue contributor.

However, Tanla has been redirecting its efforts towards its digital business beyond SMS communication, Whatsapp API and more. Although the segment does not contribute much, its share in operating profit is high due to lower cost structure and premium pricing.

Lastly, their flagship service, Wisely ATP, continues to offer muted growth. However, the service does touch upon a pain point among enterprises - to focus on secure messaging solutions. While the management's efforts haven't translated into business opportunities, they remain hopeful.

A summary of its quarterly results

Needless to say, Tanla Platforms has faced significant challenges in recent months. In the last year, its share price has fallen by almost 35 per cent.

In the fourth quarter, which ended March 31, 2025, Tanla reported a 10 per cent year-on-year decline in net profit, amounting to Rs 117.3 crore, compared to Rs 130.2 crore in the same quarter the previous year.

Its revenue for the quarter stood at Rs 1,024.4 crore as compared to Rs 1,005.5 crore a year ago, up 2 per cent.

Lastly, its gross profit has declined slightly on a year-on-year basis to Rs 105.07 crores from Rs 105.59 crores last year.

Buy it or sit this one out?

While the recent stake acquisition by promoter Dasari Uday Kumar Reddy may signal confidence in the company's future prospects, it remains to be seen whether this move will lead to sustained upward momentum. While investors should consider the company's past performance, future prospects need to be taken into consideration as well.

While the current optimism regarding the company isn't displaced, it is essential to consider the uncertainties that lay ahead. After all, Tanla Platforms operates in a highly commoditised business where margins are slim. Hence, the current PE of 14.8, a discount of 40 per cent to this five-year median, may indicate that the market is discounting it for a reason.

Only time will tell, if the company can make a great Rocky-like comeback.

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