Tanla Shares Rally 14% as Profit Growth Outpaces Revenue
Tanla Platforms surged nearly 14% after posting first-quarter earnings that showed gross profit and EBITDA growing faster than revenue, signaling a successful shift toward more profitable, cash-generating growth.
Tanla Platforms shares jumped nearly 14% after the Indian cloud communications company reported first-quarter results that demonstrated a decisive shift toward margin expansion over raw top-line growth.
Revenue rose 17.8% year-over-year to Rs 1,226 crore, up 4.1% from the previous quarter. However, gross profit climbed nearly 25% annually to Rs 326 crore, while EBITDA reached Rs 201 crore. Profit after tax came in at Rs 142 crore, pushing earnings per share up 22% to Rs 10.77.
This margin improvement is the core takeaway for investors. “Revenue grew 17.8% YoY, with gross profit and EBITDA growing even faster, reflecting an improving quality of growth,” said Uday Reddy, Founder Chairman and CEO. “Our objective isn’t revenue growth at any cost; it’s profitable growth that consistently converts into cash.”
That cash generation remains robust. The company held Rs 1,197 crore in cash and equivalents at quarter-end, even after distributing a Rs 79.6 crore dividend. The top line was driven almost entirely by the Enterprise Communications division, which accounted for 91.6% of revenue at Rs 1,123 crore.
Crucially, Tanla is extracting more value from its existing client base rather than relying heavily on new customer acquisition. Customers generating over Rs 1 crore in annualized revenue grew 16.7% year-over-year to Rs 1,180 crore. The fastest growth came from the Rs 10 crore to Rs 50 crore cohort, which surged 43.9% annually to Rs 433 crore.
On the cost side, indirect expenses fell by Rs 1 crore sequentially. Higher employee costs from annual increments and variable pay were partially offset by the reversal of performance-linked restricted stock units. Furthermore, foreign exchange losses declined by Rs 9.1 crore as the US dollar appreciated just 0.91% against the rupee, compared to 4.26% in the prior quarter.
The equity market has already priced in this operational momentum. Tanla shares have risen 29.24% over the past three months and 34.35% over six months, bringing the year-to-date gain to 24.31%.
