Tanla Solutions - Secure your portfolio with an OTP. CMP: 48.3

                                          The Company:

Tanla is the largest A2P SMS provider in India.

The simplest example of A2P (Application2Person) sms is OTP (one time password) which most of mobile phone users would be aware of.

OTP Usage:  Online payment has become preferred payment mode with ecommerce growing at a blazing pace and surge in number of online transaction. Online payment is fast becoming the mode of preferred payment even to pay utility bills like electricity, mobile bills etc. Almost all online transactions are authenticated through a numeric code called “One Time Password”. 

Tanla is a preferred destination for A2P service. Processing 42BN messages per year, 65% Of India's A2P traffic.

Tanla Solutions is a leading provider of telecom solutions to Mobile Operators, Hand set Manufacturers, Content aggregators, ISVs and Media companies globally. With over 100 customers in 32 countries, Tanla provides solutions in the areas of Voice, Video, Messaging, Application/ Content Licensing and Mobile Payments and is the first company to launch 3G VAS services in India.

Tanla's Mobile Payment Gateway is connected with more than 100 mobile operators and processes mobile payments in over 160 countries through operator, credit/ debit card billing. Leading content aggregators, ISVs and hand set manufacturers use Tanla mobile payment gateway to market their applications/ content globally.

What’s Interesting?

• India’s leading A2P sms provider.
• Once an institutional favorite, later a fallen angel and now a confirmed turnaround.
• Singapore HUB operational since Oct15.
• Improving QoQ and YoY numbers.
• Book value of 61 and virtually debt free.
• Awesome Clientele. Airtel , Vodafone, Aircel and many more.
• KPMG as auditor.
• Land bank of about 42 acres in the vicinity of Hyderabad outer ring road.

Highlights:

Mobile Solutions with an Edge

• 60 bn SMS processed by SMSC platform
• 6 bn missed call notifications handled on the MCA platform
• 350 mn Games club subscribers across 7 operators
• Over a billion dollar worth of transactions through payments platform

Building Carrier-Grade Scalable Technologies:

• 15 patented Technology products & Solutions
• 400 mn handsets embedded with license management technology
• 99.995% high availability telecom signaling products
• 1/1000th of a cent precision tracking multi device singing score platform

14 Incredible Years of Value & Innovation:

• 1st listed mobile VAS Company in Asia
• 1st Indian Company to deploy SMSC with above 50% market share
• 30 carrier partnerships across VAS eco system
• More than 100 customers in 32 countries across the value chain
• Valued Partnerships with largest carriers, OEMs & Enterprises

Financials:

KPIs	FY11	FY12	FY13	FY14	FY15	H1FY16
Sales	296.52	178.11	117.39	104.6	242.49	209.18
Operating Profit	43.08	-21.93	9.48	26.25	76.39	34.53
OPM %	14.53%	-12.31%	8.08%	25.10%	31.50%	16.50%
Net Profit	-114.48	-157.43	-147.49	-19.83	2.59	7.23
EPS	0	0	0	0	0.26	0.73

Key performance indicators during FY15:

• Increase in total annual revenue by 132 %, up from 104.6Crores in FY14 to 242.5 Crores in FY15.
• EBIDTA increased by 113% up from35.7 Crores inFY14 to 75.9 Crores in FY15.
• Domestic business revenue up by 421% from 25.4Crores in FY 14 to 132.4 Crores in FY15
• International revenue up by 18% from78.7 Crores in FY14 to 92.6 Crores in FY15

Last Quarter (Q2) Highlights:

Financial:

• 108% growth in total revenue YoY and 4% growth QoQ.
• 113% growth in business revenue YoY and 4% growth QoQ.
• 203% growth in domestic revenue YoY and 5% growth QoQ.
• 7% growth in international revenue YoY and 1.3% growthQoQ.

Business:

• Revenue from Business operations has increased by 6% from ` 96.5 Cr to ` 102.7 QoQ.
• 2 Large international clients have been boarded on the international hub in Singapore and they have started commercial traffic in October 2015 (this does not reflect in Q2 revenues).
• Domestic A2P messaging hub has processed 11.75 bn messages in Q2 FY16 compared to 4.6 billion messages in Q2 FY15.

Recent news:

• Tanla Solutions Ltd has informed BSE regarding a Press Release dated November 26, 2015 titled "Tanla's A2P Messaging Hub Touches Record Monthly High; Processes 5 Billion messages" http://www.dqindia.com/tanlas-a2p-messaging-hub-touches-record-monthly-high-of-5-billion-messages/

Updates:

• International:  International A2P messaging hub is operational from Oct 2015. 2 large international clients have been boarded in Q2 and they have started commercial traffic in October 2015, which will ramp up over the coming quarters. Delay in commercial launch of the Singapore hub was a result of implementing the changed regulations for International messaging outlined by TRAI.
• Domestic: Total volume processed in Q2FY16 is 11.75 billion messages as compared to 11.64 billion messages in Q1FY16, an increase of 156% over Q2 FY15 and 1% over Q1 FY16. India A2P messaging hub recognized as the preferred platform for delivering mission critical transactional messages like OTP’s, transaction, delivery and security alerts due to its industry leading processing times.
• KPMG in India has been appointed to assess, design and test the internal financial controls as required under the Companies Act, 2013.
• The Board has resolved to appoint one among the top 3 consulting firms viz., E & Y, KPMG and Deloitte to define the standard operating procedures for the delivery and operations teams of the Company.

Conclusion:

A2P messaging will continue to grow at scorching pace and Tanla is nicely positioned to leverage the same. Tanla is on path to regain lost glory. With Singapore HUB in operation since Oct15, the numbers will only improve further. It has all the traits of a potential multibagger.

Note: The above is only a collection of information available in public domain. Hence should not be treated as a research report.

Disclosure: It is safe to assume that I might be holding Tanla Solutions Ltd in my portfolio; hence my views could be biased. Readers should consult their financial advisory before investing.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”