Buy Affle 3i; target of Rs 2000: Anand Rathi

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • CPCU Business Model: Affle's CPCU model is expected to drive ~18.5% growth in user conversion, with broad-based growth across verticals and regions.
  • Perion Network Acquisition: The acquisition of Perion Network at ~$420mn is expected to be EPS accretive, with ~30% EPS accretion by the end of year 1, driven by ~$300mn revenue and ~$50-60mn EBITDA from Perion.
  • Verticalisation and Expansion: Affle's focus on deep verticalisation and expansion into new areas, such as DOOH, CTV, and retail media, is expected to drive growth.
  • Management Guidance: The management has reiterated its guidance of >20% organic growth in FY27 and beyond, with internal execution plans pegged at 25%.

Thesis Validation Checklist

To validate the investment thesis, investors should watch for:

  • Revenue Growth: Affle's ability to achieve ~20%+ organic revenue growth in FY27 and beyond.
  • Perion Network Integration: Successful integration of Perion Network, with ~30% EPS accretion by the end of year 1.
  • CPCU Model Expansion: Expansion of the CPCU model into new areas, such as DOOH, CTV, and retail media.
  • Margin Expansion: Improvement in EBITDA margin, driven by operating leverage and cost discipline.
  • Acquisition Pipeline: Announcement of new acquisitions, which could further drive growth and EPS accretion.