Tanla Platforms soars 9% as investors cheer sharp rise in Q2 net profit

Despite the robust rise, the net profit growth was impacted by lower interest income (cash outflow of M&A payout) and higher depreciation on intangible assets arising out of Tanla’s acquisitions in recent times

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Shares of Tanla Platforms surged over 9 percent in the early trade on October 20, a day after the company reported a 29.1 percent year-on-year rise in profit at Rs 142.50 crore for the July-September quarter.

Despite the robust rise, the net profit growth was impacted by lower interest income (cash outflow of M&A payout) and higher depreciation on intangible assets arising out of Tanla’s acquisitions in recent times.

Revenue surged 18.5 percent on year to Rs 1,008.60 crore, marking the first quarter where the topline crossed the Rs 1,000-crore mark. The rise in topline was aided by a 7 percent growth in organic revenue and 27 percent in the digital platforms segment.

Uday Reddy’s, CMD of Tanla Platforms said in an interaction with CNBC-TV18 that the company benefitted Rs 35 crore from the domestic price increases in Q2. Moreover, Reddy also expects price hikes to lead growth in the next quarter as well.

At 10.51 am, Tanla Platforms was trading at Rs 1,097.50 on the National Stock Exchange, up 7.15 percent from the previous close.

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It was overall a good quarter for the company, as the EBITDA margin expanded 312 basis points on year to 19.5 percent. The digital platform business contributed 34 percent to the gross margin.

EBITDA is short for earnings before interest, taxes, depreciation, and amortisation. One basis point is one-hundredth of a percentage point.

The company is debt-free, with a strong cash profile. Its cash and cash equivalents stood at Rs 545 crore, while equity and reserves were at Rs 1,749.9 crore at the end of the second quarter. The company’s Return on Capital Employed (RoCE) (excluding cash and cash equivalents) was at 54 percent.

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