Tanla is in a league of its own
Abraham George Market Musings
As of today, Tanla prices are down 20% from the top. Last week, it announced its Q3 FY '22 results. Except for some quarterly allocations and (lack of) smoothness of the curve, the results were very robust. Year on year, you couldn’t have asked for anything much better.
The conference call that followed the results after two days was very reassuring about the future prospects of the company. The C-suite executives led by CEO Uday Reddy were very engaging and explanatory in most of the questions put forward to them. It was one of the best earnings conf calls that I had attended.
My main takeaways were as follows:
Deepak Goyal, Chief Business officer, alluded that the new developments in CPaaS and especially what Tanla is doing will be very disruptive to the incumbent call center industry, and very soon they could be practically redundant.
With Metaverse becoming such a hot topic for discussion and its use cases being debated, we do not know if virtual avatars can be an extension for the CPaaS industry. It will be interesting to see if Tanla will explore this area. As being one of the first to wade into blockchain technology, I won’t be surprised if Tanla ventured into the metaverse space.
Aravind Viswanathan, ex-Wipro stalwart and current Tanla CFO, was very patient and thorough in clarifying various queries on revenues and cash flow related to quarterly performance and provided a context in respect to the previous quarter. Overall, he emphasized that Tanla is on a trajectory for much higher growth and further improving its bottom line.
Finally, the CEO Uday Reddy was very emphatic and clear about his vision of seeing Tanla grow in India and globally. He came across more like a golf player whose competition is himself in improving his game. He is very excited about Wisely’s prospects. Wisely is already getting adopted by Tanla’s existing clients, since pre-launch, and all new clients are getting on-boarded directly on Wisely. Tanla Q3 press release announced that further two of the top ten Indian banks are onboarded in Q3, while the likes of HDFC, Kotak, Canara, Andhra banks are already existing clients using Wisely since its launch. . He wishes to take it abroad after testing its use case with Vi™ (Vodafone Idea) in India going live in February 2022 and commercially starting from 1 March 2022. I find that quite reasonable - “you don’t go to a gunfight with knives”.
So far, Mr. Reddy has been very systematic, methodical, and passionate in his execution modus operandi. Trubloq’s success in India and now being deployed in UAE and the Cowin engagement speaks for itself. So, I have no doubt Wisely will be a big success overseas. I had written extensively about Wisely (i.e. CPaaS, Twilio, Blockchain, and Tanla - Part 6).
I reckon the next two quarters will be even better in terms of topline and bottom-line. The price had run ahead of itself in anticipation of the results and hence the correction. However, there is much more juicy stuff in the pipeline that should propel Tanla prices to greater heights in the quarters ahead.
Mr. Reddy being very cost-conscious, is not into mindless acquisitions at any cost. He has best-in-class patented platforms in his hands and essentially doesn’t need an acquisition to inherit technology - he has been categorical in his affirmation that any new acquisition isn’t for merely increasing numbers, but would be considered only if the target entity brings new features to Wisely within the framework of his One-Platform strategy. He wants to make sure he gets enough bang for the buck and will wring blood out of stone. Neither is he perturbed by what his competition is up to.
Twilio has splurged several billions of dollars for its mind-boggling acquisitions spree - it has improved its topline with no real bottom line as yet. On the other hand, Tanla has paid a pittance (less than $55 mln for Karix and Gamooga) for its two acquisitions and they are already contributing tremendously to its bottom line. Tanla remains a lean and mean company and may even get leaner with another buyback.
So, keep your fingers crossed! This company is one of the best companies that came out of India and is poised to make tangible ripples in the global marketplace.
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Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and multi-billion dollar portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund. Currently, he is a co-founder of a new hedge fund where foreign citizens can invest in Indian growth stocks like Tanla operating in hyper-growth markets like CPaaS.
Whats going wrong in Tanla? Why is the share price decreasing.
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