Affle India shares jump 7% after Citi initiates Buy rating, sees 17% upside

"We expect FY24-27E top-line growth at 20% CAGR, driven by steady improvement in CPCU, recovery in India business from 2H FY25, and a near-term turnaround in DM business. We expect EBIT margins to expand by 130bps/100bps/135bps over FY25/26/27E to 17%/18%/19%, driven by the integration of YouAppi and operating leverage on growth recovery," Citi stated.

Among Indian-listed players, Citi favours , followed by , and then . The global brokerage also likes midcap stock Cartrade.

"Our TP is based on 48x FY26E P/E – multiple at a ~50% premium to global ad-tech peers (35%/10% discount to largecap/midcap India internet). While scale is important in Adtech (Affle is one of the smaller players vs. higher PE competitors), exposure to growth market/sub-segments and higher than average expected growth justifies its premium multiple, in our view," Citi said in a note.

Citi expects Affle India's FY25 to benefit from post-integration synergies from YouAppi in developed markets. "The company may see benefits from exposure to CTV through Mediasmart. In India, as the funding environment gradually improves for start-ups, digital-native companies may start to acquire new customers more aggressively (2H FY25). Key near-term upside triggers include faster recovery in India and margins reverting to 20%+," it added.

At 10:33 am, the scrip was trading 2.2% higher at Rs 1,399 on BSE. On a year-to-date basis, the stock has delivered muted returns, having surged only 6%, while it has rallied 32% in the past year.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)