Visit http://indiaer.blogspot.com/ for complete details Disappointment – yet again…
Tanla Solutions once again reported disappointing set of numbers for
Q2FY11. The top line stood at Rs 78.3 crore against our expectations of
Rs 109.3 crore. Revenue declined 12.3% YoY while it improved by 3.5%
QoQ. EBITDA declined 27.7% YoY and improved 5.1% QoQ to Rs 21.5
crore on the back of lower revenue realisation. EBITDA margin stood at
27.4%, declining 584 bps YoY. PAT for the quarter stood at Rs 3.2 crore
aided by negative tax outgo.
Highlights for the quarter
Tanla solutions have once again reported disappointing set of
numbers though the company claims to have added new clients in
this quarter as well. Mobile payments segment has further declined
to due to lower transaction volumes from the Nokia license manager
deal. Revenue from aggregation and product services stood at Rs
52.4 crore against Rs 47.8 crore in Q1FY11. Subscription and Mobile
payments revenues improved to Rs 2.0 crore and Rs 15.0 crore vs
Rs 1.3 crore and Rs 17.9 crore in Q1FY11, respectively.
The company has added nine new customers for providing billing
and aggregation services in various geographies such as UK, South
Africa and India. The company would also be handling spot
messaging for the reality show KBC, revenues from same would
kick in from Q3FY11E.
Valuation
At the current market price of Rs 29 the stock is trading at 28.1x FY11E
EPS of Rs 1.0 and 7.8x FY12E EPS of Rs 3.7. Company’s performance has
been quite erratic over the past few quarters. Though Tanla claims to add
several new clients in VAS related services, the revenue growth does not
reflect the same. The stock is under review and we advise our clients to
avoid this stock until there is clarity on the performance of the company.
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