Affle India soars 10% on healthy Q2 results; Nomura initiates 'buy' call

Nomura expects Affle to grow revenues/EPS at 34/39 per cent CAGRs over FY19-22F led by market share gains, especially in its focus geographies of India and emerging markets.

Shares of Affle (India) surged 10 per cent to Rs 1,538, in the intra-day trade, on the BSE on Monday after the company reported a healthy 41 per cent year on year (YoY) jump in EBITDA (earnings before interest, tax, depreciation and amortisation) at Rs 21.7 crore in September quarter (Q2FY20). The margin improved to 25.7 per cent from 25.6 per cent relative to last year.

For Q2FY20, the company’s consolidated revenue grew 40 per cent YoY at Rs 84.7 crore. Net profit, too, rose 51 per cent at Rs 15.6 crore on YoY basis.

The stock, which was trading at its highest level since its listing on August 8, 2019, has more than doubled against the issue price of Rs 745 per share.

Affle is a global technology company with a proprietary consumer intelligence platform that delivers consumer engagement, acquisitions and transactions through relevant mobile advertising.

"Growth in Affle’s consumer platform business was well supported by the overall consumer trends of greater time spent across connected devices, increased adoption of online payments and consistent growth in digital marketing spends across key industry verticals including e-commerce, food, travel, transport, entertainment/OTT/gaming, healthcare, BFSI/fintech, telecom and others," the management said in a statement.

Foreign brokerage firm Nomura, too, initiate coverage of Affle India with a ‘buy’ rating and a target price of Rs 1,900 per share.

The brokerage expects Affle to grow revenues/EPS at 34/39 per cent CAGRs over FY19-22F led by market share gains, especially in its focus geographies of India and emerging markets.

“We think the underlying macro is attractive in Affle’s key markets (India & SEA), where a large internet user base, rising smartphone sales, improving data connectivity and young demographics augur well for the shift to digital. Further, as advertisers shift to direct sourcing, ad tech vendors could retain a higher share of digital ad spends, implying faster growth for ad tech vendors,” analysts said in a report.

At 12:59 pm, the stock was trading 9 per cent higher at Rs 1,517 on the BSE, as compared to a 0.19 per cent decline in the S&P BSE Sensex. The trading volumes on the counter jumped five-fold with a combined 520,455 shares changing hands on the BSE and NSE so far.