Software Sectors
Important note - Still Indian Markets are directionless and indecisive due to which any further market correction may bring some more pressure on all researched stocks mentioned in following subsections.
The market volatility situation is for short term duration and in long term the markets will recover as Indian companies are having good fundamentals and good growth prospects.
Taking into consideration current market situation it is advisable to buy stocks in steps rather than buying in bulk in single trade.
Tanla Solutions Ltd
Even as the number of users are rapidly increasing globally, the mobile service providers revenues which are called as ARPU (Average Revenue Per User) are not satisfied.
Due to this critical factor mobile service providers are in continuous process of launching VAS (Value Added Services). So this step/service opens door for Tanla solutions, which is specialize in developing mobile applications and platform for telecom industries.
Expected Returns
CMP - Rs.64.30
Buying Price - Below Rs.50 (It went down till Rs.21.30)
In long term for more than 2 years the stock may provide above 40 to 50% returns.
Taking into consideration Rs.21.30 as buying price following are the returns
343% Target acheived in month of 06 Jan 2009. It went high till Rs.94.50 (Updated - Feb 2009)
(Updated - Dec 2008)
About company
1. Tanla Solutions is a Hyderabad based company specializing in
developing mobile applications and platforms, mainly for the mobile
telecom industry.
2. For the last eight years, Tanla has evolved from a mere telecom product
licensing company to providing integrated telecom products and
services on a revenue/pay for use revenue model.
3. The company offers aggregation services (by acting as a single point
interface between content developers like ESPN, Disney and mobile
network operators like Airtel, idea), telecom-signaling products to
mobile operators and offshore services in the area of application hosting
and infrastructure management.
4. The company has strong business ties with Vodafone, O2, T-Mobile, Virgin, Orange and 3 (Hutchison); encompassing
relationships with all the mobile operators in UK, which gives it a strong lever to gain market share.
5. Tanla entered India in Q4FY08 and signed billing and messaging agreements with service provider such as Airtel, BSNL, Idea,
Reliance and Vodafone. Apart from this Tanla also entered into tie-ups with operators like Airtel and BSNL for FM radio service
on the move and setting up voice portal across India, respectively. The company is already live with all major operators for
premium SMS, which would be further aided by its tie up with five TV channels for Interactive TV (ITV) services. ITV helps media
channels to run interactive services with their viewers.
Company’s Revenue
1. With its focus on the sophisticated mobile VAS markets of UK and Ireland (estimated size $1.5 billion) that generate more than
95% of the company’s revenues, the company has cornered the market share of about 5% in these markets.
2. The company intends to increase its market share to about 8% in FY09 by bundling solutions in billing and applications, and
increasing its presence in the rich content arena.
3. Connectivity agreements are also signed with operators in South Africa, Dubai, Spain and Singapore. Notably, revenues for
these engagements are expected to accrue from Q2 FY09 onwards.
Growth strategies of company
1. Tanla recently acquired 85% of Finland based Openbit, a provider of global on device payments for mobile applications for $18.6
million. Openbit is used as payment gateway, which facilities payment through mobile phones with support from credit card
companies. Openbit’s clients include Nokia and some of the largest independent software vendors like Symantec, F-Secure
and Quickoffice and gaming companies like 3D Arts and Gamelion.
2. Openbit was installed in 1.4 million handsets during June 2008, which is typically a bend over period for the company. This
enabled Openbit to register revenues of Rs.7.4 crore and PAT of Rs.1.6 crore (revenue recognized for the month of June 2008
only). The company plan to scale up the number of installations to 50 million by end of 2008 and 190 million by 2009.
3. The Openbit acquisition will help Tanla move higher up the value chain and provide rich media and business applications. Tanla
not only gets access to Openbit’s proprietary technology and applications, but also its customer base of 90 operator networks
across 30 countries. The acquisition is expected to be 10-11% EPS accretive in the first year of operations.
4. Tanla has an ambitious plan to expand geographically by expanding its footprints from nine countries currently to 40 countries
with direct connectivity in 28 countries in FY09.
Conclusion
As per industry estimates, the global market for VAS (Value Added Services) stands at $25 billion n FY08 and is growing at 25-30% annually. Tanla solutions consist of suit of applications is definitely going to benefit from this growth prospects.
Latest Updates
(12 Dec 2008)
Tanla Solutions announces the deployment of its 3G platform with MTNL
Tanla Solutions Ltd.,the leading telecommunications software and services provider with worldwide operations on December 11, 2008, announced deployment of its 3G VAS platform with state owned Mahanagar Telephone Nigam Ltd. (MTNL). Tanla now has the distinction of being the first company to have live services over a 3G network in India.
MTNL is the first Indian mobile operator to launch 3G services in India and the services were formally inaugurated by Hon'ble Prime Minister Mr. Manmohan Singh in New Delhi today.
Commenting on the occasion, Mr. Uday Reddy, Chairman & Managing Director, Tanla Solutions Ltd said "We are proud to be associated with MTNL in this marquee event and look forward to operationalising our international suite of products and services here in India. Tanla is helping operators attract new users and build loyalty with existing customers by offering the newest applications and services supported by third generation networks."
Tanla 3G VAS platform enables a number of Video based interactive applications like Video IVR Portals, Video Chat, Video SMS and Video alerts. This enables mobile operators and service providers to enhance portal offerings with feature-rich, personalized video interactivity. The visual component of services created with Tanla's Video IVR platform makes the user experience much more intuitive and attractive than traditional voice-or-text based services and is proven to drive the uptake of 3G services like Video Calling.
Other deployments of Tanla's 3G platform within the sub continent include Dialog Telecom, Sri Lanka's largest network with over 5 million subscribers.
Tanla Solutions Ltd was recently named as the Seventh fastest growing company in India as part of the Deloitte Fast 5O program. Its Finnish subsidiary Tanla Oy (formerly Openbit Oy) was ranked 2 in the Deloitte Technology Fast 50 Finland 2008 program. With the combined strength of its subsidiary businesses Tanla now operates in over 50 countries with over 150 operator relationships.
Tanla Mobile is one of the youngest and fasted growing Network Aggregators working in partnership with leading operators like MTN, Vodafone, O2, T-Mobile, Airtel and 3 amongst others. Tanla Oy's mobile payments and application rights management solution is now on tens of millions of Nokia and other smartphones powering Navigation, Business and Entertainment applications.
Infotech Enterprises
Returns
CMP - Rs.97
Buying price near Rs.90
Returns above 60% in next 3 to 5 years.
Buying price - Below Rs.90 (It went down till Rs.70)
Returns above 60% in next 3 to 5 years.
Taking into consideration Rs.21.30 as buying price following are the returns
160% Target acheived in month of 08 May 2009. It went high till Rs.182 (Updated - May 2009)
Company profile
1. Infotech Enterprises, which provides engineering design (ED) and geospatial information system (GIS) services, besides regular
IT services.
2. The ED segment, which accounts for 63 per cent of the company’s total revenue, services clients in the engineering,
manufacturing and industrial products fields.
3. GIS on the other hand caters to clients in the utilities, telecom and government space.
It’s Engineering Design Section (ED)
1. Its ED segment is set for a strong growth on the back of a secular demand upswing in aircraft related engineering services.
2. Despite the fact that the global aviation industry has been facing tough times primarily on account of high oil prices, significant
thrust is being put towards more efficient aircrafts, which is providing a fillip for extensive R&D. Infotech is well-positioned to tap
this opportunity, by virtue of its growing relationships with Boeing, Airbus and long-standing association with Pratt & Whitney.
(Updated - Dec 2008)
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It’s GIS Section
1. GIS primarily involves surveying and digitization of spatial maps and associated features.
2. Digital map leader, TeleAtlas, is Infotech’s largest client in the GIS segment.
3. Infotech recently signed a new multi-year contract (of about $50 million) with TeleAtlas to provide extensive map database and
software development services.
4. Opportunities in the GIS space in India are largely coming from the state governments, which want their land parcels to be
digitized. For instance, in Andhra Pradesh, five districts are being digitized for a cumulative sum of $50 million.
5. The state itself has 21 districts, which gives a sense of the potential in this space for companies like Infotech.
Offset opportunity
1. Infotech has formed a 50:50 joint venture (JV) with Hindustan Aeronautics (HAL) to offer engineering services to the aerospace
sector. The JV would provide growth visibility to Infotech and help it deepen offerings within the aerospace segment, through
HAL’s strong domain expertise.
2. The potential is huge in offset business in coming future.
Acquisitions
1. The company acquired Californiabased design service provider Time To Market (TMM), an embedded software services
company.
2. TTM is focused on the niche area of backend physical design within ASIC design (integrated circuits for specific use) for several
semi conductor manufacturers.
3. The combined entity would possess the capability to provide end-to-end design services to Hi-tech markets comprising of semi-
conductor, medical, industrial automation, telecom, and computing industries.
4. The acquisition is not going to make any meaningful change to company’s financial in the near future but will reap benefits in
long run.
Further growth prospects
Infotech signed a contract with US based information service provider IHS Inc., marking its entry into the oil and gas industry. Such initiatives will not only provide new growth levers to the company but also improve its revenue mix in the engineering design segment.
