The only red flag I see in Tanla is the drop in Gross Margins in the Enterprise business. Don’t have a satisfactory answer for the 630 basis point decline. Whatever is impact due to platform migration is clearly one time. Large bank related business impact will finish by Q2. Question is how much of the 630 basis points these 2 items account for and what about the balance? Is balance going to be lost for the foreseeable future? Management did not give an answer on the call. They tried to explain with respect to 4.5% EBITDA variation, which is not fair. Part of EBITDA are already made up by increase in enterprise margins and possible reduction in salary/other expenses. They need to explain clearly the variance for this gross margin of enterprise business and for us to understand what part of loss of gross margin is permanent and what is one off.
Anyone who can communicate with company should raise this question. Rest is all noise.
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