Prabhudas Lilladher has given Buy recommendation for Affle (India) with a target price of Rs. 1379 in its research report issued on May 16, 2022

Prabhudas Lilladher’s research report on Affle (India)

Affle reported strong beat in revenue, led by solid performance across organic business (+45% YoY) and Jampp (-3% QoQ, ~35% of consolidated revenue). It is well positioned to grow higher than the industry over medium term led by 1) deeper verticalization and vernacular strategy improving direct customer share, 2) ability to capitalize on growth in ad-spends in connected TV, metaverse etc., led by consistent investments in futuristic technologies and 3) expansion in newer geographies. We cut EBITDA margins estimates by ~150bps/100bps for FY23/24 led by slower than expected rate of improvement in Jampp margins and ongoing investments in technology and expansion in new markets. Our EPS estimates increase by ~6%/2% for 23/24 led by increase in revenue estimate in FY23 and lower than expected ETR in FY23/24.

Outlook

We arrive at a DCF based TP of INR 1379 with implied earnings multiple of 55x on FY24EPS. (earlier 63x, factoring risk of reduction in ad-spends amidst global macro headwinds).

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