Affle India has potential upside of 28%: Nomura

Nomura has initiated coverage on Affle Indiawith a buy rating and target price of Rs 1900, implying a potential upside of 28 per cent from current levels. Shares of Affle India, a mobile marketing company, ended up 6 per cent at Rs 1482.90 on Friday.

“We think the underlying macro is attractive in Affle’s key markets (India & SEA-South East Asia), where a large internet user base, rising smartphone sales, improving data connectivity and young demographics augur well for the shift to digital,” said Nomura.

The brokerage said advertising spends are expected to grow at 32 per cent and 18 per cent on a compounded basis in India and South East Asia versus 15 per cent globally over FY18-FY21. “Despite this, penetration is expected to remain low at 25-30 per cent by FY20/ 21 versus 54 per cent globally, thereby offering a long runway for growth,” said Nomura. As advertisers shift to direct sourcing, advertising technology vendors could retain a higher share of digital advertising spends, implying faster growth, the brokerage said.