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IPO DETAILS

Issue Date 29th July-31st July 2019

Price Band 740-745 per Share

Bid Lot 20 & in multiplethere

Face Value Rs 10/Share

Listing BSE, NSE

Offer For Sale 4,953,020 Eq Shares

Fresh Issue Rs 90 Cr

Pre Issue Eq Shares 24,288,314 Eq Shares

BRLM ICICI Securities Ltd,

Nomura Financial Advisory

Registrar Karvy Fintech Private Ltd

Research Analyst: Astha Jain

Company is a global technology business. It have two business segments: Consumer Platform; and Enterprise Platform. Company’s Consumer Platform primarily provides the services like new consumer conversions (acquisitions, engagements and transactions) through relevant mobile advertising; retargeting existing consumers to complete transactions for e-commerce companies through relevant mobile advertising; and an online to offline (“O2O”) platform that converts online consumer engagement into in-store walk-ins. Company’s Enterprise Platform primarily provides end-to-end solutions for enterprises to enhance their engagement with mobile users. Company’s business is asset light and scalable as its employee benefit expenses, depreciation and amortization expenses and other expenses have remained relatively unchanged despite significant changes in company’s revenue in the last three fiscal years. The ad tech market in India is fast growing, with a market size of US$304.9 million in

2017 and will likely grow at a CAGR of 39% to US$808 million by 2022. (Source:

Frost & Sullivan Report). As Indian market presents high barriers to entry given its

unique challenges, such as a disjointed demographic, which is just getting habituated to

digital applications (such as the use of e-commerce, digital payments, etc.) and low

CPCU.

As at March 31, 2019, company’s Affle Consumer Platform had approximately 2.02

billion consumer profiles, of which approximately (a) 571 million consumer profiles

were in India, (b) 582 million consumer profiles were in Other Emerging Markets; and

(c) 867 million consumer profiles were in Developed Markets. For Fiscal 2019,

company’s Affle Consumer Platform accumulated over 300 billion data points.

Company continually accumulate consumer profiles and data points.

Company have run mobile advertising campaigns for some of the largest e-commerce

and mobile App companies / brands in the world, such as Amazon, Flipkart, Goibibo,

Zee, Dunzo, Dailyhunt, Meesho, Games 24x7, Shipt, BookMyShow, Wynk,

ALTBalaji, PhonePe, Gojek, Spotify, Sivvi, and well-known companies in other

industries such as Airtel, Reckitt Benkiser, Johnson & Johnson, McDonalds, Nissan,

Air Asia, Axis Bank, Citibank, and BTPN.

Company have three registered patents in the United States with multiple patent claims in areas of advertising via data communication clients, online search system, method and computer programme and method and system for extending the use and/or application of messaging system. Company also have 10 pending patent applications in India covering various algorithms in the area of digital fraud detection

Valuation

The company is bringing the issue at p/e multiple of approx. 39 on post issue FY19 eps basis at higher end of price band of Rs 740-745/share . Company being in a leading position in India has a high growth market with substantial barriers to entry. Also, company has proven international track record. Company with its profitable, low-cost business model built on an asset light, automated and scalable platform is well placed to tap opportunities present in the sector. Hence we recommend “Subscribe” on issue .

IPO REPORT

AFFLE INDIA LTD–SUBSCRIBE 26th July 2019

BROKING | INVESTMENT BANKING | RESEARCH | DISTRIBUTION | DEPOSITORY

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AFFLE INDIA LTD

IPO REPORT

Company’s Consumer Platform comprises the following: Company’s “Affle” branded consumer intelligence platform that deliver consumer acquisitions, engagements and transactions through relevant mobile advertising (the “Affle Consumer Platform”); Company’s “RevX” branded mobile only self-serve programmatic platform that delivers consumer acquisitions, engagements and transactions through relevant mobile advertising (the “RevX Platform”); Company’s “Vizury” branded retargeting media business for e-commerce companies and company’s push notifications offerings for e-commerce companies on a software as a service model (the “Vizury Commerce Business”); and • Company’s “Shoffr” branded online to offline platform that converts online consumer engagement into in-store walk-ins and transactions (the “Shoffr Platform”). Company’s Consumer Platform aims to enhance returns on marketing spend through delivering contextual mobile ads and reducing digital ad fraud, while proactively addressing consumer privacy expectations. Company primarily earn revenue from its Consumer Platform on a cost per converted user (“CPCU”) basis, which comprises user conversions based on consumer acquisition and transaction models. Company’s consumer acquisition model focuses on acquiring new consumers for businesses, which is usually in the form of a targeted user downloading and opening an App or engaging with an App after seeing an advertisement delivered by company. Company’s transaction model is usually in the form of a targeted user submitting a lead acquisition form or purchasing a product or service after seeing an advertisement delivered by company. Company also earn revenue from its Consumer Platform through awareness and engagement type advertising, which comprises cost per thousand impressions (“CPM”), cost per view (“CPV”) and cost per click (“CPC”) models. These models are relevant for brand advertisers who want to build awareness and recall and engage users online to transact with them offline/online. Company also provide end-to-end solutions for enterprises to enhance their engagement with mobile users, such as developing Apps, enabling offline to online commerce for offline businesses with e-commerce aspirations and providing enterprise grade data analytics for online and offline companies (collectively, the “Enterprise Platform”). Company also provide end-to-end solutions for enterprises to enhance their engagement with mobile users, such as developing Apps, enabling offline to online commerce for offline businesses with e-commerce aspirations and providing enterprise grade data analytics for online and offline companies (collectively, the “Enterprise Platform”). For Fiscal 2019 on a Proforma Basis, company’s revenue from its Enterprise Platform represented 2.8% of its revenue from contracts with customers. For Fiscal 2019 on a consolidated basis, company’s revenue from its Enterprise Platform represented 3.0% of its revenue from contracts with customers.

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AFFLE INDIA LTD

IPO REPORT

Asset Light model Company’s business is asset light and scalable as its employee benefit expenses, depreciation and amortization expenses and other expenses have remained relatively unchanged despite significant changes in company’s revenue in the last three fiscal years. Patents Company have three registered patents in the United States with multiple patent claims in areas of advertising via data communication clients, online search system, method and computer programme and method and system for extending the use and/or application of messaging system. Company also have 10 pending patent applications in India covering various algorithms in the area of digital fraud detection. As part of company’s acquisition of the Vizury Commerce Business, company acquired two pending patent applications in India and three pending patent applications in the United States, only one of which company intend to pursue, which is in the field of partner pixelling for user identification. Growth driven, global customer base

Global advertising spend is managed largely through six major advertising agency groups:

WPP (GroupM); Publicis; Omnicom (OMG); Dentsu Aegis Network (DAN); Interpublic

Group (IPG) Mediabrands and Havas. (Source: Frost & Sullivan Report). Company currently

work with all of the top six global advertising agency groups and with other mobile focussed

advertising agencies, such as M&C Saatchi Mobile, and with domestic advertising agencies,

such as Interactive Avenues and Madison. Company have run mobile advertising campaigns

for some of the largest e-commerce and mobile App companies / brands in the world, such as

Amazon, Flipkart, Goibibo, Zee, Dunzo, Dailyhunt, Meesho, Games 24x7, Shipt,

BookMyShow, Wynk, ALTBalaji, PhonePe, Gojek, Spotify, Sivvi, and well-known companies

in other industries such as Airtel, Reckitt Benkiser, Johnson & Johnson, McDonalds, Nissan,

Air Asia, Axis Bank, Citibank, and BTPN.

As at March 31, 2019, company’s Affle Consumer Platform had approximately 2.02 billion

consumer profiles. For Fiscal 2019, company’s Affle Consumer Platform accumulated over

300 billion data points. This gives company a deep data-driven understanding of consumer

intent and behaviour

As at March 31, 2019, company’s Affle Consumer Platform had approximately 2.02 billion

consumer profiles, of which approximately (a) 571 million consumer profiles were in India, (b)

582 million consumer profiles were in Other Emerging Markets; and (c) 867 million consumer

profiles were in Developed Markets. For Fiscal 2019, company’s Affle Consumer Platform

accumulated over 300 billion data points. Company continually accumulate consumer profiles

and data points.

Company’s Consumer Platform has a leading position in India; a high growth market with

substantial barriers to entry According to Frost & Sullivan, company is a leading ad tech solution provider in India. As at

March 31, 2019, company’s Affle Consumer Platform had approximately 571 million

consumer profiles in India. Company provide services across the value chain in digital

advertising, spanning the areas of DMP, DSP/SSP, fraud detection and ad network. Affle India

is one of the very few companies that have products spanning the entire value chain. Further,

company have increased its breadth of its service offerings, especially to e-commerce and

mobile app driven companies, following the acquisition of company’s Vizury Commerce

Business and company’s RevX Platform. While some companies are more focussed on buy-

side platforms, others are focused on the publisher side. (Source: Frost & Sullivan Report).

The ad tech market in India is fast growing, with a market size of US$304.9 million in 2017

and will likely grow at a CAGR of 39% to US$808 million by 2022. (Source: Frost & Sullivan

Report). As Indian market presents high barriers to entry given its unique challenges, such as a

disjointed demographic, which is just getting habituated to digital applications (such as the use

of e-commerce, digital payments, etc.) and low CPCU.

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AFFLE INDIA LTD

IPO REPORT

Enhance company’s Affle Consumer Platform’s revenue from existing and new customers in India and acquire new consumer profiles beyond Tier 1 cities Over the last two calendar years, approximately 25% of all internet users in India have shopped online and the number of e-commerce shoppers is forecast to grow at a CAGR of 33.7% from 100 million in 2017 to 320 million in 2022. FrostFrost & Sullivan expects growth to be driven by retailers and brands diversifying their presence and widen their distribution with integrated online-offline models to gain access to customers beyond those in Tier 1 and Tier 2 cities. (Source: Frost & Sullivan Report). In addition to focusing on consumers in Tier 1 cities, company intend to increase the number of consumer profiles in Tier 2 cities, Tier 3 cities and rural markets, which are areas that company’s customers have not placed much emphasis on to date. Company have partnered in the past with Micromax Informatics Ltd. in order to enhance its consumer intelligence and company intend to continue to do that in the future, which will enable company to increase its consumer intelligence in Tier 2 cities, Tier 3 cities and rural markets. In addition, company will encourage its Affle Consumer Platform’s customers to put more emphasis on ad campaigns that focus on consumers in Tier 2 cities, Tier 3 cities and rural markets, which will increase company’s consumer profile base in those areas. Continue to selectively pursue acquisitions

There are over 100 companies around the world that offer one or more components of the digital advertising technology. Only a few companies/groups operate internationally, such as company, InMobi, Criteo, Trade Desk, Freakout, Mobvista and YouAppi, among others, thereby providing company with opportunities for consolidation.Company look to continue acquiring businesses, assets, and technologies that complement company’s existing capabilities, revenue streams and marketing presence and which will result in sustainable financial growth. Expand company’s international business through local business development efforts

and through referrals from its existing customers : Though the number of company’s Affle Consumer Platform’s consumer profiles outside India was 71.7% of company’s Affle Consumer Platform’s total consumer profiles and the average CPCU for the Fiscal 2019 on a consolidated basis was more outside India, company’s revenue from contracts with customers outside India for the Fiscal 2019 on a consolidated basis was 56.4% of its total revenue from contracts with customers. For the Fiscal 2019 on a consolidated basis company’s average monetization factor, which is the percentage of converted users company delivered relative to the number of consumer profiles on its Affle Consumer Platform (the “Monetization Factor”), was 6.9% in India compared to 1.8% in Other Emerging Markets and 0.6% for Developed Markets. Company intend to increase the Monetization Factor for its Affle Consumer Platform’s consumer profiles outside India by increasing company’s business development efforts to gain more customers outside India and through referrals from its existing customers. Company currently have business development teams outside India in Singapore, Jakarta (Indonesia) and Dubai (UAE) (company opened an office in Dubai in March 2019).Company’s plan for increasing company’s business development efforts outside India is to build a business development team in North America during Fiscal 2020 to service the North American market.

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AFFLE INDIA LTD

IPO REPORT

Risk factors

Company’s business is concentrated around key customers. The top 10 customers of company’s account for almost 65% of company’s FY19 revenue. Hence loss of any of these customers will expose to company a significant risk.

Objects of Offer

The objects for which Company intends to use the Net Proceeds of fresh issue are as follows: 1. Funding the working capital requirements of Company; and 2. General corporate purposes

Consolidated Financial Statement (Rs Cr)

Particulars FY19

Total Income 249.40 Operating Exp 179.09 EBIDTA 70.31 EBIDTA Margin (%) 28.19 Other Income 0.40 Depreciation 10.10 EBIT 60.61 Interest 0.81 PBT 59.80 E/O Item 0.00 PBT After E/O Item 59.80 Sh of Profit in JV 0.00 PBT 59.80 Tax 10.98

PAT 48.82 Other Comp Inc -0.33 Adjusted PAT 48.49 NPM(%) 19.44 Eq Capital 24.29 Res & Surplus 48.12 Non Con Int 0.00 Net Worth 72.41 Eq Shares ( In No) 2.43 EPS 20.10 ROE (%) 66.97 ROCE (%) 74.46 Book Value 29.81

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