Prabhudas Lilladher - Tanla Solutions

Prabhudas Lilladher has buy rating on Tanla Solutions and revised its price target to Rs 944.

"We expect Tanla 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 614, the stock trades at 19.8 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. We have increased the target price as we have factored in the contribution from Ireland and we believe that this stock is on a path of re-rating," the brokerage said in its Sep 21 report.

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," the report adds.

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