Buy Affle (India); target of Rs 1535: Sharekhan

Sharekhan's research report on Affle (India)

The company revenue/PAT has continued to grow at a healthy rate of19%/16% during H1FY24 despite high base and headwinds. The management expects a shift of 50-60% of ad spend toward digital platforms in the next 3-4 years, driving broad-based growth of around 20% y-o-y for Global Emerging markets including India. While growth across Global Emerging market is expected to be largely intact, stronger revenue growth from India (~30% revenue mix in H1FY24) is expected during H2FY24, driven by festive spending, Cricket World Cup, and elections. Growth in developed markets is expected to be driven by acquired mobile app marketing platform, Youappi. Strong cash generation (OCF/PAT for FY23/H1FY24 at ~106%/74% respectively) and recent preferential issue equips the company to aggressively pursue inorganic and AI related investments.

Outlook

We maintain Buy on Affle (India) with revised PT of Rs. 1,535, as its strong foothold in the Global Emerging market including India (75% of revenue mix), makes it well placed to sustain its high revenue growth momentum. Moreover, the contribution from YouAppi’s acquisition improves the outlook for developed markets. The stock trades at ~39x its FY2026E EPS.