Buy Affle (India); target of Rs 1403: Prabhudas Lilladher

Prabhudas Lilladher's research report on Affle (India)

Affle reported strong revenue growth of 127.9% YoY (Ple: 118%). Organic business grew 45% YoY implying strong growth of 15% QoQ in Jampp (~36% of consolidated revenue). As per management, Affle is not much impacted by inflationary pressures faced by developed markets as it has negligible exposure to Europe and very low exposure to US, with 80% of exposure to emerging markets. We believe that if advertising budgets tighten, spend will shift more towards digital advertising and ROI linked CPCU advertising model such as that of Affle. Affle is well positioned to grow higher than the industry led by its strong tech platform, deep verticalization and vernacular strategy, and ability to profitably scale up acquisitions.

Outlook

Our EPS estimates increase by ~6%/6% for FY23/24 led by increase in revenue estimates by 4%/5% in FY23/24 led by beat in Q1 and 53bps increase in margin estimates in FY24. We arrive at a DCF based TP of Rs. 1403 with implied earnings multiple of 54x on FY24EPS. The stock is trading at 42x on FY24 EPS of Rs.26 with Revenue/Normalized EPS CAGR of 38%/37% over FY22-24.

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