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Its Consumer Platform aims to enhance returns on marketing spend through delivering
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NCD Jan 2019 – Should you invest?
Affle (India) IPO Issue details
shrivalli R on 10.15% Manappuram Finance
NCD Jan 2019 – Should you invest?
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Affle (India) IPO RHP Prospectus can be downloaded at this link
1) Offer for the sale (OFS) of 4.95 Mn equity shares by the Selling Shareholders totaling
to approx. Rs 349 Crores. The company will not receive any proceeds from the Offer and
the entire proceeds from the Offer will go to the Selling Shareholders.
The promoters of the Company are Anuj Khanna Sohum and Affle Holdings. Affle
Holding, the Singapore headquartered parent entity is holding a sizeable stake in the
company with other equity partners, i.e. Microsoft, D2C, Itochu, Centurion Investment
Management and Bennett Coleman & Co. Ltd. Post issue along with Malabar group, their
combined shareholding will be around 75%.
1) Company revenues increased from Rs 39.45 Crores for the year ended Mar-15 to Rs
121.4 Crores for the year ended Mar-19.
2) Company profits increased from Rs 2.25 Crores for the year ended Mar-15 to Rs 16.6
Crores for the year ended Mar-19.
3) Its EPS for FY2019 is Rs 6.87 and 3 years average EPS is at Rs 4.67.
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How is the company doing in terms of financial performance – Consolidated basis?
Due to restatement of nos, company has published proforma nos for FY2019 consolidated
basis.
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Credit rating is not required for issue of equity shares, hence, they have not approached
any credit rating agency for credit rating.
Currently there is no GMP available for Affle (India) Limited IPO GMP.
2) HNIs – 15%
Every investor should understand the company’s key strengths so that one can compare
with its competitors to know how unique is such company in their business. Their
investment decision would change based on these facts. Here are the key strengths of
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g y g
the company.
1) Their Consumer Platform has a leading position in India; a high growth market with
substantial barriers to entry.
3) Profitable, low-cost business model built on an asset light, automated and scalable
platform.
4) As at March 31, 2019, Affle Consumer Platform had approximately 2.02 billion
consumer profiles. For Fiscal 2019, their Affle Consumer Platform accumulated over 300
billion data points. This gives us a deep data-driven understanding of consumer intent
and behavior.
6) Addressing digital fraud and data safety issues that are prevalent in the industry.
7) Experienced and dedicated Key Management Personnel, who are ably supported by
their other employees.
1) Enhance their Affle Consumer Platform’s revenue from existing and new customers in
India and acquire new.
3) Expand their international business through local business development efforts and
through referrals from their existing customers.
4) Drive further penetration in their top customers and deliver more converted users for
large e-commerce companies.
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Positive Factors in Affle (India) IPO
2) Its profits have improved in the last 3 years, i.e. 0.5% for FY2017 Vs 13.7% for FY2019.
Improved margins would always reward investors by share price appreciation and by way
of dividends.
3) The company is first mover in the business segment in India, where there are no listed
peers in India.
Major risk Factors to consider before investing in Affle (India) Limited IPO
These risk factors can impact company revenue and margins which would affect its share
price. Investors should go through and understand these risk factors before investing.
1) There are outstanding litigations against company, their corporate Promoter, their
individual Promoter and certain of their Directors and any adverse outcome in any of
these litigations could have an adverse impact on their business, results of operations,
cash flows and financial condition.
2) They had negative cash flow generated from investing activities for Fiscal 2019 on a
consolidated basis. They had negative cash flow generated from investing and financing
activities for Fiscal 2019, 2018 and 2017 on an unconsolidated basis and they may
experience negative cash flows in the future.
3) They do not own any of the properties from which they operate. If they are unable to
renew their current leases or if they renew them on terms which are detrimental to
company, they may suffer a disruption in their operations or increased relocating costs,
or both, which could adversely affect their business, results of operations, cash flows
and financial condition.
5) If their ability to collect significant amounts of data from various sources is restricted
by consumer choice, restrictions imposed by customers, publishers and browsers or other
software developers, or changes in technology it may have a material adverse effect on
their business, results of operations, cash flows and financial condition.
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7) Their business depends on their ability to maintain the quality of content for their
customers and publishers.
8) For complete internal and external risk factors, you can refer the IPO RHP of the
company.
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Is the issue price of Affle (India) IPO reasonably priced or over priced?
If we consider its consolidated EPS for last year FY2019 of Rs 20.1 on the higher price
band of Rs 745 the P/E works out to be 37x. There are no listed peers to compare, hence
we cannot say whether the issue price is under priced or overpriced.
Company revenues have grown by 3x in the last 5 years. Company’s margins have
improved in the last 3 years. Company issue price cannot be ascertained whether it is
under priced or overpriced. I would have been excited if the company would have
grown in terms of revenues. Considering some of these positive factors and first mover
in business segment in India, High Risk Investors can invest in this IPO with a time frame
of 3-5 years. Investors may or may not get listing gains.
Disclaimer: The information in this article is for information only. This is not a
recommendation to invest in this IPO. Please consult your investment advisor before you
invest in such high risk IPOs.
If you like our IPO analysis, please share it with your friends through email, on Facebook
or on Twitter. This would help us to reach a larger audience and we can provide more
and more meaningful analysis in the coming IPOs.
Suresh
j 4 s b o4 SHARES
The Author
Suresh KP
Suresh KP i.e. me have written 1,800+ articles on this blog. I have done by B.Com from Osmania University
and then MBA-Finance from Symbiosis University, Pune. I have over 20 years of experience in analyzing
various investment options and money saving ideas. I love doing financial planning, Mutual Fund Analysis,
Searching long term Stocks for wealth creation, IPOs, reviewing Insurance Products, analysing Health
insurance Plans etc.
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