Citi initiates coverage on Affle with ‘Buy’, sees 20% upside; stock up 6%

Citi initiates coverage on Affle with ‘Buy’, sees 20% upside; stock up 6%

Citi initiates coverage on Affle (India): International brokerage Citi Research has initiated coverage on global technology company Affle (India), with a ‘Buy’ rating, with a target price of Rs 1,600, marking an upside potential of 19.5 per cent.

“Our target price is based on 48x FY26E P/E – multiple at an approximately 50 per cent premium to global ad-tech peers (35 per cent/10 per cent discount to LargeCap/MidCap India internet). While scale is important in Adtech (Affle is one of the smaller players versus higher PE competitors), exposure to growth market/sub-segments and higher than average expected growth justifies its premium multiple, in our view,” Vijit Jain and Raghav Behani, research analysts at Citi Research said in a note. 

Analysts believe Affle is well positioned to benefit from recovery in mobile-ad budgets for user acquisitions across digital-first and omnichannel businesses in India/emerging markets (EM) and its return on equity (RoE)-focused Mergers and Acquisition (M&A) strategy, including recent acquisition of YouAppi, should see business turnaround in large developed markets (DM) markets like the US. 

Notably, at 9:28 AM, Affle (India0 stock zoomed as much as 6.68 per cent to hit a fresh 52-week high of Rs 1,461 after Citi’s ‘Buy’ call. In comparison, BSE Sensex was trading 0.24 per cent higher at 80,155.59 levels. 

In the past one month, Affle has outperformed the market by surging nearly 22 per cent, as compared to 5 per cent gain in BSE Sensex. The stock has surpassed its previous high of Rs 1,393 touched on June 27, 2024. It had hit a record high of Rs 1,510.15 on January 14, 2022.

Affle is a global technology company with a proprietary consumer intelligence platform that delivers consumer recommendations and conversions through relevant Mobile Advertising. The platform aims to enhance returns on marketing investment through contextual mobile ads and also by reducing digital ad fraud.

Affle Holdings is the Singapore based promoter for Affle (India), and its investors include Microsoft, Bennett Coleman & Company (BCCL) amongst others.

On June 26, 2024, Affle Holdings Pte. Ltd. (Singapore), the promoter of Affle had sold 2.5 million shares or 1.78 per stake in the company via open market.

GIC Private Limited on account of the Monetary Authority of Singapore (MAS) and Gamnat Pte Limited (Gamnat) had acquired 1.62 million shares or 1.15 per cent stake via open market, according to disclosure made by the company on stock exchanges.

Meanwhile, here are the top factors for the ‘Buy’ call: 

Competitive edge 

Analysts said Affle has strategically positioned itself as a strong alternative to major “walled gardens” like Facebook and Alphabet. They highlighted key competitive advantages including verticalisation in high-growth sectors, a conversions-based business model where customers pay based on performance, major data advantage in India and other emerging markets, and strategic partnerships with original equipment manufacturers (OEMs) to access premium touchpoints.

Additionally, Affle boasts a solid track record in mergers and acquisitions, focusing on expanding into new verticals, geographies, and enhancing ad-tech capabilities. Therefore, analysts believe these factors will drive profitable growth for Affle and deliver high Return On Advertising Spend (ROAS) for its clients.

US recovery signals India’s economic rebound


The brokerage anticipates a favourable economic environment with the US set for recovery and India expected to follow suit. They foresee Affle benefiting from synergies unlocked post-integration of YouAppi in US and developed markets, as well as from its exposure to Connected TV (CTV) through Mediasmart. In India, analysts said, improving funding conditions for startups could accelerate customer acquisition efforts by digital-native companies in the latter half of FY25.

Upside triggers

The near-term catalysts for Affle, analysts highlighted, include a quicker rebound in India and margins reverting to over 20 per cent, indicating potential upside.


Citi projects a robust 20 per cent compound annual growth rate (CAGR) in revenue from FY24 to FY27, with India leading at 28 per cent and international markets at 16 per cent growth. 

They expect earnings before interest, taxes (Ebit) margins to expand by 130 basis points (bps) in FY25, 100 bps in FY26, and 135 bps in FY27, reaching 17 per cent, 18 per cent, and 19 per cent respectively. The growth trajectory is underpinned by the integration of YouAppi and operational efficiencies gained from growth recovery, analysts added.

First Published: Jul 09 2024 | 9:37 AM IST

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