TANLA SOLUTIONS Waits Till Citigroup Settles down

Despite the circumstances, Tanla Solutions has done exceedingly well for itself for the second quarter ended 30th September 2008. On a YoY basis, the consolidated net revenue of the company has grown by 97% at Rs.211.15 crore and despite the operating expenses more than doubling, the company posted a net profit of Rs.70.54 crore, a rise of 92%. Even on a QoQ, the performance has been good. Net revenue rose 26% and PAT showed a growth of 25%.

And yet, the company yesterday touched a new at Rs.59, though it recovered from that level and settled above Rs.60 levels. But why did it touch a new low in the first place? Well, the beleaguered Citigroup has a 8.75% stake in the company and given the trouble that it is in, the market perception is that Citi would now be pressing sales in all its holdings in Indian stocks. Though a rescue package has been announced, there is still concern that Citi would continue selling to shore up its liquidity to tide over the current crisis.

Tanla remains a very sound company. A zero debt company, being mainly in the telecom sector, the impact of the global financial crisis is muted. The mobile market in both UK and India remain resilient to recent economic upheavals. Emerging markets like India too have shown healthy trends in mobile services. In September alone, there was a record 10 million subscriber addition with the total mobile subscriber figure crossing the 300 million milestone.

In Q2, Tanla's Mobile Payments performance highlighted the increasing global shipments of smart and feature phones. License Manager installations from Tanla OY were close to 6 million handsets with September alone doing close to 3 million. All smart phones being sold by manufacturers like Nokia carry Tanla's mobile application rights management product. This service is now available in India through Tanla's tie-up with Airtel and would shortly be rolled out with other operators.

The stock price could continue to see some more volatility, till things do not settle down on the Citigroup front.
thanks