Fundamental Analysis of Affle India: Since its listing in August 2019, the stock of Affle India has surged 470%. What’s more? This company has kept many investors due away to its difficult-to-understand business: IT services around ad tech and consumer analytics. Thus, in this article, we’ll perform a fundamental analysis of Affle India simplifying the company and see what makes this small-cap ITeS stock so interesting.

Fundamental Analysis of Affle India

We shall start our study by briefly reading about the company and its products. In the process, we’ll also equip ourselves with the industry landscape. Next, we’ll see how it has performed financially and grown in the past. A highlight of the future plans and a summary to conclude the article at the end.

Company Overview

Founded by Anuj Khanna Sohum in 2006, Affle is a consumer intelligence technology company with a global footprint. The company had its IPO in August 2019 and has been listed on the Indian stock exchanges: BSE & NSE since then.

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Affle has a worldwide presence with its clients and offices spread across the globe. It has a proprietary consumer intelligence platform that helps its clients to deliver customer recommendations and achieve conversions. 

The company is basically engaged in mobile/smartphone advertising through its unified platform. Its solutions help businesses and apps to advertise more effectively with data-centric scientific targeting. 

Source: Affle India Ltd. Annual Report FY 2021-22

The technology company is run by a strong workforce of 550+ employees. It counts well-known brands such as Swiggy, Fossil, Dailyhunt, GCash, and many others as its clients. The verticalized focus of the company on clients from selected fast-growing industries such as e-commerce, fintech, gaming, etc. has helped it to grow at a rapid rate in recent years.

Industry Overview

Smartphone and internet adoption has boomed across the world as well as in India in the past few years. People are adopting technology at a rapid pace in their lives for various uses such as social media, e-commerce, entertainment, and more.

According to a report from EY, the nation’s digital consumer economy is projected to grow multifold into an $ 800 billion market by 2030. This will consequently lead to the rise of digital advertising.

The nation’s online ad spending rose by 35.3% in 2021 on a yearly basis led by 4G penetration, reduced cost of the internet, new app launches, rising income levels, and rapid growth of social media & smartphone adoption. 

In 2022, mobiles accounted for 75% of the total digital media spending. Desktops’ share stood at a mere 25% pointing to the large handheld ad economy. As for future growth, the advertising expenditure on smartphones is anticipated to grow rapidly at an annual rate of 32% to reach 78% by the end of 2023 for the reasons highlighted above.

Summing up our industry analysis, we can say that the company is well-poised to grow in a fast-growing industry. In the next section of our fundamental analysis of Affle India, we’ll learn how it has grown over the years.

Affle India – Financials

Revenue & Net Profit Growth

At first glance, it seems that the consolidated revenues and net profits of the company have grown multi-fold in the last four years. The top line quadrupled from Rs 249 crore in FY19 to Rs 1082 crore in FY22. The same happened with the bottom line which was Rs 215 crore in FY22. 

However, a closer study of the company reveals that the growth is inorganic in nature. In the last few years, Affle made multiple acquisitions and investments such as Jampp, Appnext, Discover Tech, Bobble, and OS Labs.

This renders the evaluation of operating revenue and net profit growth incomparable across the years. Nevertheless, the management is confident about the future outlook as these strategic investments and acquisitions are supposed to fit well in the consumer analytics ecosystem of the company.

The table below presents the operating revenue and net profit growth of Affle India for the last four financial years.

Fiscal YearOperating RevenueNet Profit
(figures in Rs Cr)


Moving on to the profitability analysis, we shall be using the EBITDA margin for our fundamental analysis of Affle India instead of operating and net profit margins.

EBITDA stands for earnings before interest, tax, depreciation, and amortization expenses. EBITDA margin equals EBITDA divided by the total revenue. It is denoted in percentage terms and is more suitable for assessing the profit margins of technology companies such as Affle.

Overall, the EBITDA margin has come down in recent years as the revenue grew at a rapid rate. The company has yet to realize higher earnings from its recent investments and acquisitions.

The figures below present the EBITDA margin of Affle India for the previous four fiscals.

Fiscal YearEBITDA Margin
(figures in %)

Return Ratios: RoCE & RoE

The balance sheet of the company underwent considerable change recently because of the qualified institutional placement (QIP) and investments & acquisitions made by the company. Thus, the return on equity (RoE) and the return on capital employed (RoCE) seems to have declined in FY22 from their previous levels.

The table below presents the return ratios: RoE and RoE of Affle India for the past few years.

Fiscal YearRoERoCE
(figures in %)

*The return ratios for FY22 have been adjusted for the unutilized portion of the Rs 600 crore it raised via QIP

Debt / Equity & Interest Coverage Ratio

Talking about the debt levels, Affle India being a technology company with minimal CAPEX needs is a fundamentally strong stock with a low debt-to-equity ratio of 0.20 and an interest coverage ratio of 25.6. 

The figures below tell how the debt/equity ratio and interest coverage ratios have behaved for the stock in the previous four years.

Fiscal YearDebt / EquityInterest Coverage

Future Plans Of Affle India

So far we looked at the previous fiscals’ data for our fundamental analysis of Affle India. In this section, we’ll try to get some sense of what lies ahead for the company and its investors.

  1. The company has created a local presence in selected international markets such as South East Asia, Middle East Africa and Latin America to tap the rapid growth in developing and under-developed nations.
  2. The strategic investments and acquisitions which are in line with the core offerings have helped to company to broaden its competitive moat and build its Affle 2.0 consumer platform stack. The benefits of this are expected to accrue in the coming years.

Key Metrics Of Affle India

Let us take a look at the key metrics of the stock.

CMP₹960Market Cap (Cr.)₹12,800
EPS₹18.8Stock P/E51.1
Promoter Holding59.9%Book Value₹100
Debt to Equity0.20Price to Book Value9.63
EBITDA Margin18.50%Dividend Yield0.00%

In Conclusion

Investors have cheered the inorganic growth approach of Affle to capture the market share as the online advertising sector is growing at a tremendous pace. The recent quarterly data further tells that the investments seem to be working out well. For instance, the trailing twelve months (TTM) net profit stood at Rs 252 crore on the sales of Rs 1,393 crore for the quarter ending December 2022. Going forward, the quarterly sales growth and any new investments/acquisitions will be key triggers for Affle India’s stock. 

What are your views on this company? Do you see it as a good growth stock or simply a company on an acquisition frenzy? How about you let us know your views on the company in the comments below?

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