Target: ₹1,354
CMP: ₹1,043.45
Our Internet Thematic focused on two essential characteristics for a behemoth: Cash cow and positive unit economics. Affle (India), a consumer tech company in the form of an ad-tech platform satisfies both.
Affle has built its presence in multiple layers of the digital ad ecosystem. It had the foresight of the market evolving to mobile first a decade ago. This spearheaded the development of monetisation via CPCU model, which proved to be a game changer. Its success lies in matching appropriate inventory to users, such that conversions happen for advertisers.
Execution prowess sustenance notwithstanding changing environment and regulations is the key MOAT. With increasing discretionary spends and Affle’s tech prowess, we believe Affle is well placed to ensure business longevity. We value Affle at 42x FY25E P/E (26 per cent CAGR over FY22-25), akin to consumer companies given similar characteristics and higher growth.
Key risks remain challenging campaign KPIs and privacy regulations.
We initiate with a Buy rating, with a DCF-based target price of ₹1,354.