Buy Affle (India); target of Rs 1330: Sharekhan

Sharekhan's research report on Affle (India)

Affle India delivered a mixed performance for Q3FY23 with reported revenues at Rs. 376.1 crore, up 6.1 q-o-q, led by a rise in CPCU revenue and Non-CPCU platform revenue that rose 4.9%/25% q-o-q, respectively, but missed our estimates by 4.5%. EBITDA for Q3FY23 stood at Rs 80.3 crore (up 18.7 % y-o-y/13.5% q-o-q). EBITDA margin improved 140 bps q-o-q to 21.4%, ~70 bps above estimates due to moderation in inventory and data costs and employee expenses. Adjusted net profit grew by 14.8% y-o-y/17.6% q-o-q to Rs. 69 crore, 4.5% ahead of our estimates. Management cited that the outlook for CY23 is favorable, since in case of developed markets the company has already found some key verticals where they can accelerate, while global emerging markets ( 80% of the business) has been quite resilient as reflected in 23% growth in Q3FY2023.

Outlook

Affle is well diversified with regards to markets, use cases, platforms, customers, publishers and has reasonable cash in hand. With key markets of India and global emerging markets continuing to grow steadily, Affle is well placed to capture market opportunities in mobile advertising spends. Hence, we maintain Buy with a revised price target (PT) of Rs. 1,330.

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