Target-A-Year

Tanla Solutions

CMP: 601
Target 1: 940
Target 2: 1030

Current Quote of Tanla Solutions

Tanla Solutions is an outperformer with a price target of Rs 940.

Tanlan is expected to clock revenues of Rs 410 crore in 2007-08 (Apr-Mar) and Rs 620 crore in 2008-09. At the current market price of Rs 601, the stock trades at 19.7 times the 2007-08 estimate earnings per share of Rs 31.1 and at 13 times 2008-09 estimate earnings per share of Rs 47.2. The target price is quite achievable if we factor in the contribution from Ireland and its been believed that this stock is on a path of re-rating.

The company has forayed into Ireland. "Tanla has tied up with all the Irish operators which include 3, O2, Vodafone and Meteor. The total addressable market for Tanla is around Rs 1,000 crore. Revenues would start flowing in from second quarter of 2007-08. The margins in Ireland will be at par with the company level as there is no major capex involved here.

Tanla's US subsidiary has begun operations and revenues are likely to flow in three months. It is also looking for acquisitions there.

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