Buy Affle (India); target of Rs 1515: Sharekhan

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Sharekhan's research report on Affle (India)

Affle India delivered mixed performance for Q2FY23 with reported revenues at Rs 354.6 crore, up 29.1% y-o-y, led by a rise in CPCU revenues that rose 31.8% y-o-y but marginally missed our estimates by 1.2%. EBITDA jumped to Rs 70.8 crore (up 36.1 % y-o-y/3.1% q-o-q). EBITDA margin improved 103 bps y-o-y to 20% in Q2FY2023, in line with estimates. Adjusted net profit grew by 40% y-o-y/6.2% q-o-q to Rs. 58.7 crore and was 1.2% ahead of our estimates led by higher other income (up 71.3% q-o-q) and lower tax rate (12.8% versus 13.9% in Q1FY23) partially offset by higher finance costs (33.1% q-o-q) and higher depreciation (40.4% q-o-q). The management cited that they expect the industry to grow 10% higher in H2FY23 compared to H1FY23, also as H2 is a festive period and with advertisers having additional budgets for the festive period they believe it should get evenly spent in Q3 and Q4.

Outlook

We maintain Buy rating with an unchanged PT of Rs. 1,515, given its steady earnings growth potential, strong presence in high-growth verticals and shift of advertising budgets towards mobiles.