ICICI Direct is bullish on Affle India has recommended buy rating on the stock with a target price of Rs 1775 in its research report dated Jun 01, 2020.
ICICI Direct's research report on Affle India
Affle India (Affle) reported healthy growth in Q4FY20 revenues. Revenues increased 32.3% YoY to Rs 80 crore (organic revenue growth was ~11%). In terms of revenue split, India revenues (account for 54% of revenues) increased 45% YoY to Rs 43.4 crore (entire growth was organic) while international revenues increased 28% YoY to Rs 38.6 crore (entirely driven by acquisition & organic revenue growth fell ~15%). EBITDA and PAT adjusted for write back of creditors, were broadly flat. Adjusted EBITDA, PAT margins were at 25%, 18% vs. 33%, 24% in Q4FY19, respectively.
The company will be a key beneficiary of increased spend in mobile advertising (to increase at ~35% CAGR in 2019-25). Further, in a post Covid world, we expect a significant shift among consumers to adopt digital technology globally, which will drive long term revenues. In addition, the company’s unique business model, healthy PAT margins (above 19%) and RoIC of 26% makes Affle an attractive company. Hence, we have a BUY recommendation on the stock with a target price of Rs 1,775/share.
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