Another large acquisition in the CPaaS space by an Indian player and this time its a global acquisition – Tata Communications acquires Kaleyra
The acquisition is at around 0.74x EV/Sales, a cut price deal in a stressed environment for global CpaaS. Kaleyra is not a business like TWLO which makes 50% GMs, Kaleyra GMs are more like Tanla, around 20-22%. But they are likely to have interesting proprietary platforms and solutions which should be valuable. If Tata Comm can cut the excess fat in Kaleyra and get it to become EBITDA +ve while scaling up revenues through its existing wide network and relationships, this acquisition can be quite value accretive.
Tata Comm will add around 1200Cr of debt to its balance sheet for this acquisition but it has a very strong balance sheet with great cash generation – 10x interest coverage ratio and 80% CFO/EBITDA ratio in the last 5Ys – so this acquisition shouldn’t stress their balance sheet at all.
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