Affle India debuts with double digit premium, what should investors do?

Most experts Moneycontrol spoke to said short-term investors could opt for listing gains, but long-term investors should hold shares, as they could give far better returns than listing gains over the next one-two years.

The major reasons for long-term call are company's unique business model, proven international track record, asset light low-cost business model, automated and scalable platform etc.

"Investors should keep the stock for long term i.e. for next two years, as anticipated returns are higher about 50 percent considering business fundamentals and experties in segment," Rajnath Yadav, Research Analyst at Choice Broking, said.

Prashanth Tapse, AVP Research, Mehta Equities, also advised investors to add more and hold it for short to medium term with a target of Rs 1,150-1,200.

Considering Affle's presence in high-growth advertising market globally as well as India, Tapse believes Affle is well placed in the mobile-only advertising space.

Affle India is a global profitable technology business company. Despite the highly competitive nature of the market, it has reported decent financials (PAT Rs 49 crore, return on equity 67.4 percent, debt to equity 0.1x - FY19 consolidated).

"At higher end of the price band of Rs 745, the issue is priced at P/E of 38.9x (post dilution) on FY19 consolidated basis and 36.7x on proforma basis, which we believe is fully priced. But considering current market condition, we expect the stock to be a good long term bet," Mrinalini Chetty Desai, assistant vice president (wealth), Centrum Broking, said.

She said Centrum was positive on the company. Affle was a niche business which investors should see from four-five year holding period, rather than only from the listing perspective, Desai said.

Those looking to buy the stock should do so in the range of Rs 800-900, but if it is available around the issue price, it would be a good price to buy for long term, experts say.

"If in any case listing is in between 10-15 percent (around Rs 820-860) premium over the issue price due to subdued market scenario, one can look for buying in the same range for short to medium term (three-six months) with a target of Rs 1,150-1,200," Tapse said, proposing Affle as a long-term investment opportunity.

Long-term investors could buy the stock even at Rs 900 level, Yadav said.

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