Awash in cash

With the stock trading near its all-time high, Affle CEO Anuj Khanna Sohum sells stock worth ₹4.38 billion 

Boasting a unique play on consumer intelligence and mobile marketing, Affle made a strong debut on the bourses in August 2019. It listed at Rs.930, a premium of 25% over its issue price of Rs.745. Over a year later, it has managed to quadruple to Rs.3,785, recovering remarkably from the March low of Rs.899.

In Q2FY21, the company posted revenue of Rs.1.36 billion, crossing the Rs.1 billion-mark for the first time ever. Net profit came in at Rs.269.76 million, registering 73% year-on-year growth from Rs.155.88 million posted in Q2FY20. In the earnings call, co-founder and CEO Anuj Khanna Sohum said, “The growth is driven by the emerging trend of accelerated consumer adoption of mobile and connected devices globally.” He added that the increasing need of advertisers now for return on investment and data focused digital marketing, is making Affle an “indispensable part of the mobile marketing ecosystem”.  

Soon after, the stock hit its all-time high of Rs.4,072 on December 16. Two days later, Anuj Khanna Sohum sold shares worth Rs.4.38 billion through promoter company Affle Holdings, trimming its stake from 52.62% to 48.05%. After the sale, promoter holding now stands at 63.81%. While Affle Holdings sold 1.16 million shares, funds managed by Nomura picked up 777,648 shares at Rs.3,755.

Post the upbeat management commentary in the earnings call, analysts at Axis Securities maintained a ‘buy’ rating on the stock with a target price of Rs.3,539, which the stock has already crossed. According to their report, they are betting on Affle’s better services mix and multiple long-term contracts spread across verticals. In Q2, 90% of the company’s revenue came from its top 10 verticals which include entertainment, e-commerce, ed tech, fintech, food tech, FMCG, gaming, groceries, government and healthcare.

Analysts at ICICI Direct, too, have maintained a ‘buy’ rating on the stock with target price of Rs.3,525. They are betting on the company’s acquisitions of Indus OS, Appnext and Mediasmart which will lead to overall revenue growth and help penetrate the vernacular markets of India. “The company’s unique business model and healthy PAT growth prompt us to remain positive on the stock,” mentions their report.

Meanwhile, mutual funds have marginally reduced their stake from 8.98% to 8.88% between June 2020 and September 2020. During the same period, FIIs have increased their stake from 7.59% to 8.37%, with Aberdeen Standard Asia increasing its holding from 1.52% to 1.71%. As per the September 2020 holding, Malabar Investments holds the biggest non-promoter holding at 7.30%.