Affle India to acquire Singapore-based Appnext; stock jumps 5%

Shares of Affle India jumped 5 per cent to Rs 1,555.55 on the BSE on Tuesday after the company announced acquisition of Singapore-based Appnext Pte Ltd. At 10:05 am, the stock was trading 3.45 per cent higher at Rs 1,532.65 apiece on the BSE, compared to 271 points, or 0.79 per cent, gain in the benchmark S&P BSE Sensex at 34,641.95 level.

" Affle (India) Limited through its subsidiaries (“Affle”), today announced the signing of definitive agreements to acquire full control of Appnext Pte. Ltd., Singapore and 100% IP of Appnext app discovery and recommendation platform with immediate effect," the company said in a regulatory filing. READ HERE

Affle will initially acquire 66.67 per cent equity ownership in Appnext Singapore, with a clear path to acquire 100 per cent equity ownership upon attainment of mutually agreed growth targets, it added.

Appnext’s app discovery and recommendation platform enables top mobile handset manufacturers (OEMs) and apps developers to deliver personalized app recommendations to mobile users globally. Utilizing its proprietary ‘Timeline’ technology, Appnext predicts which apps the users are likely to use next. With 300 million daily active users, 20+ on-device daily interactions through strategic OEM partnerships and 60,000+ apps, Appnext is the leading independent app recommendation platform delivering over 4 billion app recommendations per day.

"Affle 2.0 will focus on building sustainable market leadership in India as well as enhancing our competitive advantage globally through our technology innovations. The Appnext platform transforms ads into app recommendations as a service for consumers and thus strengthens our CPCU business model by enabling greater ROI for advertisers," said Anuj Khanna Sohum, Chairman, MD and CEO of Affle. 

During the March quarter of FY20, Affle India reported a consolidated profit after tax of Rs 15.3 crore, regiatering a 5.7 per cent year-on-year (YoY) growth. Its consolidated revenue from operations totalled Rs 80 crore, up 32.3 per cent YoY, while earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 5.1 per cent to Rs 21.1 crore.

"Macro trends are positive for AFFL, as consumers are spending more time online, resulting in a rise in internet traffic and an increase in transactions made online. More time spent online increases available ad inventory and opportunities to target customers, and increases affinity of customers to shop online, positives for AFFL’s business model. Besides, Advertisers invest in digitization and look for opportunities to cater to its customer base online. Further, in markets where lockdown restrictions were not as strict as India, such as SEA, e-commerce business experienced high volumes, resulting in higher ad spending online. That apart, shift towards more ROI focused business model drives AFFL’s ability to gain market share," said Japanese brokerage firm Nomura in its results update note. The brokerage has 'Buy' call on the stock with a target price of Rs 1,900.

Meanwhile, those at Axis Capital believe Affle is well positioned to capture the immense growth opportunity given exponential growth in digital ad world; end-to-end platforms for digital advertisement; sustained gains from underpenetrated markets like South East Asia and India; margin tailwinds driven by cost efficiencies, lower input costs backed by technologies; and Healthy cash flow generation. They have 'Buy' call on the stock with a target price of Rs 1,888.