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Buy Affle (India); target of Rs 1496: Prabhudas Lilladher

Buy Affle (India); target of Rs 1496: Prabhudas Lilladher
November 15
21:24 2021

Prabhudas Lilladher is bullish on Affle (India) has recommended buy rating on the stock with a target price of Rs 1496 in its research report dated November 12, 2021.

Broker Research

November 15, 2021 / 04:50 PM IST

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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Prabhudas Lilladher’s research report on Affle (India)

Affle reported exceptionally strong revenue growth +103.6% YoY much above our & cons estimates (Ple: 66.6%, Cons: 68%) led by strong growth in organic business (34% YoY) as well as Jampp (revenue of ~INR 824 mn, ~50% above pre-acquisition quarterly revenue run-rate of ~INR 545 mn). This reflects Affle’s success in bringing back growth focus in Jampp which was struggling with growth & profitability pre-acquisition. Converted users in CPCU business grew at strong rate of 73% YoY and CPCU rate jumped to INR 51.3 (+22.1% QoQ) led by higher share of international revenue (66.9% in Q2, Jampp based in LATAM contributed 30% of revenue). Affle’s deep domain vertical capabilities has led to continued growth in contribution from direct customers, 74% revenue in H1FY22 (vs 67% in FY21, 57% in FY20).

Outlook

Our EPS estimates increase by ~16%/6%/2% for FY22/23/24 led by increase in revenue estimates. We arrive at a DCF based TP of INR 1496 (implied earnings multiple of 63.3x on FY24EPS). Affle is currently trading at 72.3/49.5 on FY23/24 EPS of 16/24 with revenue/EPS CAGR of 39%/37% over FY22-24E.

For all recommendations report, click here

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