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AFFLE (INDIA) LIMITED

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AFFLE (INDIA) LIMITED

 

AFFLE (INDIA) LIMITED

 

 

Price Band: 440-445                                                                                                                                Issue Opens: July 29                                                                                                                                               Issue Closes: July 31

 

Consolidated
Year Equity Capital Net Worth Long Term Debt Total Sales PAT BV(Rs) EPS (Rs) P/E* P/BV*
2019 24 74 1 250 49 30 20.1 37.1 24.4

 

Unconsolidated
Year Equity Capital Net Worth Long Term Debt Total Sales PAT BV(Rs) EPS (Rs) P/E* P/BV*
2019 24 46 0 121 17 19 6.9 108.5 39.1
2018 24 30 0 85 9 12 3.6

*Price: 745

ROE (2016-2018): 67.4%

 

Issue size:
Total Issue: 6,169,220 Equity Shares of Rs 10 (aggregating up to Rs 459.00 Cr)

Fresh Issue: 1,216,200 Equity Shares of Rs 10 (aggregating up to Rs 90.00 Cr)

Offer for Sale: 4,953,020 Equity Shares of Rs 10 (aggregating up to Rs [.] Cr)

Objects of the Issue:
The objects for which the company intends to use the Net Proceeds are as follows:

  1. Funding the working capital requirements of the Company; and
    2. General corporate purposes.

The company will not receive any funds from the offer for sale. The object of the Offer for Sale is to allow Affle Holdings to sell up to 4,953,020 Equity Shares held by it.

Acquisitions:

  1. Vizury: Retargeting Platform (2018)
  2. Markt: Programmatic Ad Platform (2018)
  3. Shoffr: O2O Marketing Platform (2019)
  4. RevX: Multi Channel Commerce (2019)

 

Risks related to the company: (According to DRHP)
1. We had negative cash flow generated from investing activities for Fiscal 2019 on a consolidated basis. We had negative cash flow generated from investing and financing activities for Fiscal 2019, 2018 and 2017 on an unconsolidated basis and we may experience negative cash flows in the future.

  1. Regulatory, legislative or self-regulatory developments regarding data protection could adversely affect our ability to conduct our business.
  2. The market in which we participate is intensely competitive and we may not be able to compete successfully with our current or future competitors.

The market for mobile advertising solutions is highly competitive and rapidly changing with multiple regional and global players. Although it is dominated by digital giants such as Google and Facebook, there are over a hundred companies around the world who offer one or more components of this solution. However, only a few companies/groups operate internationally, including, among others, us, InMobi, Criteo, Tradedesk, Freakout, Mobvista and YouAppi. (Source: Frost & Sullivan Report).

  1. Our business is concentrated around key customers (approx 70 % from top 10 customers & approx 40% from top customer), which account for a significant amount of our revenue. If we fail to keep these customers or fail to diversify our customer base, our business, results of operations, cash flows and financial condition may be materially adversely affected.

Business Model:
Affle is  a global technology business with two business segments:

  1. A) Consumer Platform

The Consumer Platform primarily provides the following services: (1) new consumer conversions (acquisitions, engagements and transactions) through relevant mobile advertising (the company only makes money if the advertisement leads to a successful transaction); (2) retargeting existing consumers to complete transactions for e-commerce companies through relevant mobile advertising(specific ads targeted to consumers to encourage them to complete their transactions); and (3) an online to offline (“O2O”) platform that converts online consumer engagement into in-store walk-ins.

As at March 31, 2019,  Affle Consumer Platform had approximately 2.02 billion consumer profiles, of which approximately 571 million were in India, 582 million were in Other Emerging Markets (which comprises Southeast Asia, the Middle East, Africa and others) and 867 million were in Developed Markets (which comprises North America, Europe, Japan, Korea and Australia). During Fiscal 2019, the Affle Consumer Platform accumulated over 300 billion data points, which power the prediction and recommendation algorithm for the Affle Consumer Platform. The Consumer Platform is used by business to consumer (“B2C”) companies across industries, including e-commerce, fin-tech, telecom, media, retail and FMCG companies, both directly and indirectly through their advertising agencies.

Approximately 97% of Affle India’s revenue is from their Consumer platform.

  1. B) Enterprise Platform.

Enterprise Platform primarily provides end-to-end solutions for enterprises to enhance their engagement with mobile users.

Strengths of the company:
1. Profitable, low-cost business model built on an asset light, automated and scalable platform

  1. No other listed company in India does the same thing; hence it’s the only company in its peer group

 

 

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