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    Results Below Expectation Due To Seasonally Weak Quarter Outlook Remains Healthy

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    The document provides an analysis on Affle Ltd. It notes that the company's Q3FY23 results missed estimates due to a seasonally weak quarter. While estimates were marginally lowered, the recommendation is maintained as Buy due to strong deal wins and recovery potential. The target price is set at Rs. 1,250 per share.

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    Results Below Expectation Due To Seasonally Weak Quarter Outlook Remains Healthy

    Uploaded by

    Meharwal Traders
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    The document provides an analysis on Affle Ltd. It notes that the company's Q3FY23 results missed estimates due to a seasonally weak quarter. While estimates were marginally lowered, the recommendation is maintained as Buy due to strong deal wins and recovery potential. The target price is set at Rs. 1,250 per share.

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    Affle research

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    The document provides an analysis on Affle Ltd. It notes that the company's Q3FY23 results missed estimates due to a seasonally weak quarter. While estimates were marginally lowered, the recommendation is maintained as Buy due to strong deal wins and recovery potential. The target price is set at Rs. 1,250 per share.

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    © All Rights Reserved
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    26 views1 page

    Results Below Expectation Due To Seasonally Weak Quarter Outlook Remains Healthy

    Uploaded by

    Meharwal Traders
    The document provides an analysis on Affle Ltd. It notes that the company's Q3FY23 results missed estimates due to a seasonally weak quarter. While estimates were marginally lowered, the recommendation is maintained as Buy due to strong deal wins and recovery potential. The target price is set at Rs. 1,250 per share.

    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    of 1

    BUY

    Results Update Affle Ltd. Target Price


    16th May 2023 IT Services 1250

    Results below expectation due to seasonally weak quarter; Outlook


    (CMP as of 15 May 2023 )
    remains healthy
    CMP (Rs) 921
    Est. Vs. Actual for Q3FY23: Revenue – MISS ; EBITDA Margin – MISS; PAT – Upside /Downside (%) 36%
    MISS High/Low (Rs) 1,369/871
    Changes in Estimates post Q3FY23 Market cap (Cr) 12,278

    FY24E/FY25E: Revenue: 0.5%/1%; EBITDA: 0.5%/1%; PAT: 1%/1% Avg. daily vol. (6m)Shrs. 5,94,320
    No. of shares (Cr) 14.6
    Recommendation Rationale
     Device addition remained tepid during the quarter but strong additions in converted Shareholding (%)
    users Sep-22 Dec-22 Mar-23
     The international business vertical has declined during the quarter but is likely to Promoter 59.9 59.9 59.9
    regain momentum. FIIs 14.2 12.6 11.4
     The management is confident of gaining medium-term demand momentum on the MFs / UTI 6.2 7.5 8.2
    backdrop of the deals it has won in the previous quarters. It also expects Banks / FIs 0.0 0.0 0.0
    improvement on the margin front moving forward. Others 19.7 20.0 20.5

    Sector Outlook: Cautiously positive


    Financial & Valuations
    Company Outlook & Guidance: The management has indicated robust revenue Y/E Mar (Rs Cr) FY23E FY24E FY25E
    growth guidance for FY24 backed by strong deal wins. Margins are likely to Net Sales 1,434 1,986 2,463
    expand in the near term. EBITDA 285 497 616
    Current Valuation: 47x FY25E P/E; Earlier Valuation: 51x FY25E Net Profit 245 559 706
    EPS (Rs) 9.2 21.0 26.6
    Current TP: 1,250/share (Earlier TP: Rs 1350/share)
    PER (x) 117.3 51.4 40.7
    Recommendation: Given the company’s strong recovery potential backed by strong P/BV (x) 50 28 21
    deal wins and improved client engagement, we maintain our BUY recommendation on EV/EBITDA (x) 42 27 16
    the stock. ROE (%) 39% 58% 49%
    Financial Performance
    Change in Estimates (%)
    In Q4FY23, Affle Ltd. reported tepid growth with revenue at Rs 356 Cr, registering a de-
    Y/E Mar FY24E FY25E
    growth of 5.4% QoQ. Consolidated EBITDA for the quarter de-grew by 10.8% QoQ to Rs Sales 1% 1%
    712 Cr, led by the lower international business. The company’s EBITDA margins also EBITDA 1% 1%
    declined by 140 bps QoQ to 20% in Q4FY23. It reported a net income of Rs 62 Cr, down PAT 1% 1%
    9.5% QoQ.
    ESG disclosure Score**
    Outlook
    Environmental Disclosure 44
    From a long-term perspective, we believe Affle has strong device additions and better Social Disclosure Score 60
    client additions. We believe the company has better penetration in the international Governance Disclosure 59
    Score
    business and strong revenue growth potential going ahead. Total ESG Disclosure Score 51
    Source: Bloomberg, Scale: 0.1-100
    Valuation & Recommendation **Note: This score measures the amount of ESG data a company reports
    publicly and does not measure the company's performance on any data
    point. All scores are based on 2020 disclosures
    We recommend a BUY rating on the stock and assign a 47x P/E multiple to its FY25E
    earnings of Rs 26.6/share to arrive at a TP of Rs 1,250/share, implying an upside of 36%
    Relative performance
    from the CMP.
    525
    Key Financials (Consolidated) 425

    325
    (Rs Cr) Q4FY23 QoQ (%) YoY (%) Axis Est. Variance
    225
    Net Sales 356 -5% 5% 372 -4% 125

    EBITDA 72 -11% 6% 77 -7% 25


    Jan-20 Jul-20 Feb-21 Sep-21 Mar-22 Oct-22 May-23

    EBITDA Margin 20% 110 bps 150 bps 21% -4% Affle India BSE Sensex

    Net Profit 62 -10% 11 58 8% Source: Capitaline, Axis Securities

    EPS (Rs) 5.19 18% 11% 4.6 13%

    Source: Company, Axis Research


    Omkar Tanksale
    Research Analyst
    Email:omkar.tanksale@axissecurities.in

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