A company’s stock has fallen more than 40% from its 52-week high. Its full-year revenue actually declined. And yet, in that same year, its gross margins expanded to their best level in recent memory, cash flow from operations exceeded its adjusted profit, and its new foreign parent just raised the dividend by 50%.
Shrinking revenue and improving profitability, at the same time, on purpose. That’s not a contradiction — it’s a strategy, and most people scrolling past the headline “revenue declined 3.7%” never get far enough to see it.
What it does
This company sits behind the scenes of something almost everyone interacts with daily: the OTP in your SMS inbox, the delivery update on WhatsApp, the bank alert after a transaction. It operates in CPaaS — Communications Platform as a Service — the infrastructure layer letting banks, e-commerce platforms, and telecoms send messages, calls, and notifications at scale. Revenue is transaction-based: a small fee per message or call, multiplied across roughly 175 billion billable transactions a year, across 3,000-plus clients in 20-plus countries.
In 2023, one of Europe’s larger telecom groups agreed to acquire a majority stake in this company for over $700 million; the deal closed in 2024. This year’s results tell the story of what changed since: management deliberately walked away from a large chunk of lower-margin, low-quality revenue — specifically international long-distance voice traffic — accepting a smaller top line for a healthier, more defensible business underneath.
Explanation video:
The numbers
Full-year revenue came in around ₹4,408 crore, down 3.7% YoY. Despite that, gross profit rose nearly 6%, with margin expanding to 22.9% from 20.8% — the direct result of exiting the low-margin voice business in favor of higher-margin omnichannel messaging (WhatsApp Business and RCS specifically grew at a 43% CAGR between FY22–FY26).
Reported PAT for the year fell to ₹257 crore from ₹334 crore. But the most recent quarter alone saw PAT jump nearly 90% YoY to ₹114 crore, with the best quarterly gross margin in several quarters — suggesting the reshaping is starting to show through on a run-rate basis.
Cash generation is a genuine bright spot: operating cash flow of ₹581 crore, over 110% of adjusted EBITDA, backed by a comfortable net cash position of close to ₹1,389 crore. That confidence showed up directly in a 50%-guided dividend increase.
Capital allocation and growth
Management is running this for durable cash generation first — raising the dividend meaningfully, keeping a disciplined, small-scale approach to M&A (targeting AI-native capabilities rather than big transformative deals), and guiding toward mid-to-high single-digit revenue growth next year with an EBITDA margin held near 12%. Growth drivers going forward: continued shift toward higher-margin omnichannel messaging, cross-sell through the parent’s 900+ mobile network operator relationships, and AI-native product development.
Risks, plainly
Execution risk on the reshaping strategy — growth needs to resume from a smaller, cleaner base
Institutional investors reportedly reducing exposure even as quarterly numbers improved
Strategic decisions now sit within a larger foreign parent’s priorities, not solely this business’s own
A genuinely competitive, global CPaaS market with constant margin pressure
Currency and regulatory exposure across 20+ countries
On valuation
At the current price, the company trades at a market cap of roughly ₹3,454 crore, a P/E of about 9.8, and a book value of ₹440, putting price-to-book at just over 1.2x. A single-digit P/E, a price near book value, and early signs of margin recovery is a combination value-oriented investors take seriously — but it doesn’t resolve whether the market is pricing in further softness, or being too cautious about a business still mid-transition.
So — which company is it?
