Affle India - Company Update - Q1FY21 - ICICI Securities

Affle India's (Affle) revenues increased 12.2% QoQ (20.4% YoY) to Rs. 89.8 crore mainly led by inorganic revenues (that contributed ~Rs. 18.5 crore in the quarter). Organic revenues fell 4.4% YoY (up 1.8% QoQ). Adjusted EBITDA margins were flat on a QoQ basis at 25.0%. PAT margins were at 20.9%, an increase of 180 bps QoQ mainly led by lower tax expenses.

Valuation & Outlook

Increased penetration in top 10 verticals, newer geographies and tier-2 & tier-3 cities of India will drive topline in the long run. In addition, 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. Further, the company's unique business model, healthy PAT margins (above 19%) and RoIC of ~40% makes Affle an attractive company. Hence, we have a BUY recommendation on the stock with a target price of Rs. 2,330/share (35x FY23E EPS).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Affle_CoUpdate_Aug20.pdf

Source : Equity Bulls

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