Affle (India) is gaining momentum with stellar Q2 numbers

Affle (India) is gaining momentum with stellar Q2 numbers

by 5paisa Research Team Last Updated: Dec 13, 2022 - 06:02 pm 47.1k Views
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The stock zoomed 6% after an excellent Q2-FY22 result.

This stock was listed on NSE two years back, and from the listing date, it has registered 580% returns in a short period of 25 months.

Unbelievable returns, right. The company is able to generate this huge return with its unique business model, robust financial performance, and efficient management.

Business model

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

In simple terms, when you browse in any e-commerce website, you look for some products, those data points will be collected by Affle and it will be retargeted to existing consumers to complete transactions. This is their major revenue driver.

Around 97% of revenue is made from new consumer conversions (acquisitions, engagements, and transactions) through relevant mobile advertising, retargeting existing consumers to complete transactions for e-commerce companies, An online to offline (“O2O”) platform that converts online consumer engagement into in-store walk-ins.

Unbelievable growth in numbers

In the last three years from FY18 to FY21, revenue has grown at a CAGR of 46% and profit has grown at a CAGR of 69% which shows the steep growth of the company. The operating margin is stable in the range of 25% to 28% for the last three years.

Yesterday Q2 numbers were out and the stock zoomed 6% after the Q2-FY22 report. Net sales grew 103% on a YoY basis stood at Rs 274 crore, EBITDA grew by 51.1% on a YoY basis to Rs 52.1 crore, Net profit jumped 77.2% on a YoY basis to Rs 47.82 crore.

Future growth prospects

The company continues to witness a strong market opportunity with advertisers consistently accelerating their digital spending, resulting in persistent, broad-based growth across their top industry verticals coming from both Indian and International markets.

Mobile advertising has huge potential due to rapid growth in Smartphone penetration, cost-effective packages, majority population in India is between 18-30, their usage of smartphones is relatively more and targeting them would be much easy.

Valuation

Companies like these will definitely trade in premium. It is trading at a TTM P/E of 300x against industry P/E of 88.17x. It is clearly higher in valuation.

Do you feel fundamentals and company performance would justify it?

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