Target: ₹2,538
CMP: ₹1,579.95
In Q2 FY25, Affle (India) reported a strong topline growth of 26 per cent yoy, delivering 95 million conversions at a CPU rate of ₹57.1. This resulted in CPCU revenue of ₹541.60 crore, reflecting an increase of 35.2 per cent on a yoy.
During the quarter, developed market revenue showcased a strong growth of 27.5 per cent on a yoy basis, contributing about 27 per cent of total revenue. However, gross margin contracted by 51 bps due to rising inventory costs as the company continues to refine its platform offerings with premium inventory and deeper ecosystem partnerships.
Affle achieved strong revenue growth, coupled with margin expansion fueled by operating leverage, resulting in significant gains in EBITDA and PAT. This performance is driven by the company’s continued investment in operational efficiency, leveraging synergies from its consumer platform, and integrating GenAI capabilities into its operations.
As digital advertising continues to expand in India and other emerging markets, it is well-positioned to capitalize on this growth, particularly in high-potential sectors such as e-commerce, fintech, gaming and entertainment. With a unique business model, unmatched network effects, and a prudent acquisition strategy, we have revised our estimate and maintain our Buy rating with a target price of ₹2,538.