Buy Affle India Ltd For Target Rs. INR 2,000 By Elara Capital Ltd
Affle India (AFFLE IN), in its 3i-summit (innovation, impact, intelligence), indicated its ambition to grow 10x (at a 25% CAGR) in a decade to leverage two decades of rich expertise. It aims to focus on: a) underpenetrated MSME advertising and b) rapidly growing adoption of connected TV (CTV). AFFLE developed tools to tap growing ad demand from MSMEs, harnessing a market of 70mn enterprises. It demonstrated OptiX AI and CTV AI tools, supported by data and ROI-driven strategies. With robust presence in high-growth sectors – e-commerce, fintech, gaming, healthcare (EFGH) – its conversion-led model and CTV-AI for hyperlocal targeting positions it well amid a structural shift towards digital ad regime. Cult of branding along with conversion shall yield AFFLE an edge over peers. AFFLE remains one of our top picks in the internet space. We reiterate Buy with a TP of INR 2,000 based on 45x December 2026E P/E.
Focus on underpenetrated ad space in MSMEs: AFFLE seeks to tap an underpenetrated MSME digital ad market to leverage data intelligence. Varied initiatives under ‘Affle consumer stack platform’ aims to democratize the ad space – Out of 70mn MSMEs, a mere 13,000 advertisers are on liner TV. ROI-driven hyperlocal digital ads shall be the next frontier for growth. AFFLE’s rich expertise with geographical diversification across key sectors (e-commerce, gaming and healthcare) yields it an edge. AFFLE’s conversion-led model is aligned for advertisers, prevalent for MSMEs given the constrained budgets. We believe its scalability is hinged on ground-level execution, platform awareness and agile tech capabilities given diverse consumers
Key beneficiary of tailwinds from CTV and local ads: CTV’s rapid adoption has opened up opportunities for targeted ads, benefiting AFFLE. The monthly active sets for CTV (50mn) posted a 49% CAGR in the past three years and its screen share set to raise from 25% present to 35% of the total TV screens by CY30E. This shift to connected platforms has opened up the market for personalized ads and improved measurability. AFFLE aims to leverage the growth in CTV, and has built in-house a dedicated CTV-AI, which provides multi-factor (geography, language, age, etc.) targeted ads in a few seconds followed by an immediate launch. YouTube’s quadrupled viewership on CTV underscores the traction in online streaming. Thus, we remain positive on AFFLE’s CTV gameplay
On the right side of ad ecosystem and key growth categories: Amid a structural shift, digital ads are a high-growing space. Within that, AFFLE’s presence in fast-paced EFGH bodes well. Also, 74% revenue exposure to direct B2B instead of 3P deals props recurring business, giving a rise to strategic partnerships with OEMs
Maintain Buy; TP retained at INR 2,000: Well-demonstrated tech capabilities and prudent-yet-growth focused approach cement our confidence in AFFLE. We factor in a 23% YoY revenue CAGR till FY27E, led by growth engines – India and emerging markets (22.4% YoY), and developed markets (24.9% YoY). We estimate 90bps EBITDAM gain by FY27E to 21.9% (on 9MFY25), directionally aligned to 23% guidance in the medium term. AFFLE is trading at ~1.0x PEG (at 30% PAT CAGR in FY24-27E and 31x FY27E P/E). We maintain Buy with TP unchanged at INR 2,000 on 45x December 2026E P/E
Please refer disclaimer at Report
SEBI Registration number is INH000000933
