Buy Affle 3i; target of Rs 2000: Anand Rathi

Anand Rathi's research report on Affle 3i

Affle 3i’s H1FY26 revenue grew ~19.3% y/y to ~Rs 12.7bn, with CPCUrevenue up ~18.2% y/y (~98.8% of topline) and rest from non-CPCU. EBITDA grew ~31.2% y/y to ~Rs2.86bn with margins expanding 205bps y/y to ~22.6%. Recent ~20-22% correction in stock price was mainly due to lower-than-estimated CPCU-revenue led by ad-budgets shifting to Q3 from Q2 in the US amid tariff-related uncertainty and partial RMG impact in India. Ahead, we expect the full ~3% RMG impact (i.e., Rs170-180m/quarter) to playout in Q3 (and continue till H1FY27), partially offset by festive season in India and revival in developed markets (from ~20.2% y/y in H1FY26), as US marketing budgets ramp-up.

Outlook

With company optimistic of ~18-20% y/y topline growth in near-term (20%+ y/y thereafter) and post-correction valuation comfort, we upgrade our rating to BUY with an unrevised TP of Rs2,000 (valuing at 45x Sep’27e earnings). Near-term key trigger would be good inorganic acquisitions as the company has ~Rs14.6bn net cash on its books (H1FY26).