Prabhudas Lilladher has given Buy recommendation for Affle (India) with a target price of Rs. 1672 in its research report issued on Feb 08, 2022

Prabhudas Lilladher’s research report on Affle (India)

Affle reported strong beat in revenue growth at +125.5% YoY (Ple: 104%) led by strong growth across both organic (excluding Jampp) business (+50% YoY) and Jampp (~37% QoQ, ~33% of consolidated revenue). Growth was broad-based led by strong digital ad-tech spends supported by festive season. Converted users grew at strong rate of 91% YoY. Average CPCU rate increased to INR 51.8 (+1% QoQ) driven by higher International revenue share at 69% in Q3 vs 66.9% in Q2 led by Jampp contribution. EBITDA grew at 76% YoY with EBITDA margin at 19.9%, +90bps QoQ. (Ple: 19%). Sequential improvement in margins was led by lower employee costs (-50 bps QoQ) and lower Inventory and data costs (-40 bps QoQ). Margins in organic business are around ~26% and Jampp margins have improved to 7- 8% vs 5% in Q2. Our EPS estimates increase by ~10-11% for FY22/23/24 led by increase in revenue estimates.

Outlook

We arrive at a DCF based TP of INR 1672 (implied earnings multiple of 63x on FY24EPS). Affle is currently trading at 71x/49x on FY23/24 EPS of 18/27 with Revenue/EPS CAGR of 41%/35% over FY22-24E.

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