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This mobile marketing firm's stock has doubled investor wealth in 3 months; Nomura says buy

The Financial Express logo The Financial Express 13-11-2019 FE Online
a hand holding a glass: Affle (India) shares were trading 9% higher at Rs 1,614.20 on BSE. Nomura has a target stock price of Rs 1,900 on the shares. © Provided by IE Online Media Services Pvt Ltd Affle (India) shares were trading 9% higher at Rs 1,614.20 on BSE. Nomura has a target stock price of Rs 1,900 on the shares.

While shares of mobile marketing firm Affle India has more than doubled investor wealth since its IPO, global brokerage firm Nomura has initiated coverage on the stock with a 'buy' rating. Affle (India) shares were trading 9% higher at Rs 1,614.20 on BSE. Nomura has a target stock price of Rs 1,900 on the shares. The target price implies an upside of more than 18% from today's high. Notably, the shares have more-than-doubled investor wealth as compared to the issue price of Rs 745 in August.

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In the July-September period, Affle India reported has recorded a 50 percent on-year rise in net profit to Rs 15.5 crore. The firm has recorded a 42% rise in earnings before interest, tax, depreciation and amortisation (EBITDA). "Growth in Affle?s consumer platform business was well supported by the overall consumer trends of greater time spent across connected devices, increased adoption of online payments and consistent growth in digital marketing spends across key industry verticals including e-commerce, food, travel, transport, entertainment/OTT/gaming, healthcare, BFSI/fintech, telecom and others," the management said in a statement to the exchanges.

"We initiate with a buy on Affle, a leading digital AdTech player in India. We think the underlying macro is attractive in Affle's key markets (India & SEA), where a large internet user base, rising smartphone sales, improving data connectivity and young demographics augur well for the shift to digital," Nomura said in a report.

According to Nomura's estimates, digital advertising spends are expected to grow faster at 32% and 18% CAGR in India, and SEA against 15% globally over FY18-21E. Despite this, the penetration is expected to remain low at 25-30 percent by FY20/21E against 54 percent globally, thereby offering a long runway for growth, Nomura said in its report.

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