Buy Affle (India); target of Rs 1130: Sharekhan

Sharekhan's research report on Affle (India)

Affle (India) reported revenue at Rs 355.8 crore, down 5.4% q-o-q/ up 12.9% y-o-y missing our estimates of Rs 380.1 crore as CPCU revenues fell q-o-q owing to seasonally weak Q4 and due to impact of macro headwinds in developed markets in Food tech and Entertainment verticals. EBITDA margin declined ~200 bps q-o-q to 19.4%/ up ~90 bps y-o-y in Q4FY23 missing our estimates of 21.3% as other operating expenses rose on account of audit fees or other professional services. Management is optimistic on India and emerging markets and expects to achieve 20-25% y-o-y growth in India and emerging markets and are aiming at an EBITDA margin of above 20% in FY24.

Outlook

We maintain a Buy rating on Affle India with a revised PT of Rs. 1130 as the company continues to grow steadily in its key India and global emerging markets and is well-diversified with regards to markets, use cases, platforms, customers and publishers. At CMP, the stock trades at 39.2/32.5 its FY2024/FY2025E EPS.

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