Affle IPO - Grey Market, GMP & Reviews

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About Affle (India) Limited

Founded in 2005, Affle is a global technology company with a proprietary consumer intelligence platform that delivers consumer engagements, acquisitions and transactions through relevant Mobile Advertising. The platform aims to enhance returns on marketing investment through contextual mobile ads and also by reducing digital ad fraud.

While Affle's Consumer platform is used primarily by online & app companies for mobile advertising & monetization, its Enterprise platform helps offline companies to go online through platform-based app development, enablement of O2O commerce and customer data platform.

The advertising agencies of business to consumer (B2C) companies uses the consumer platform across different industries. The list of industries includes telecom, fin-tech, e-commerce, retail, FMCG companies, and media.

Affle uses user-intent indicators based on transactional data, marketing attribution and behavioural signals. Based on such information, the company predicts the likely interest of the user. It keeps on updating the system based on data to improve consumer engagement and enable consumer actions. The company runs the campaigns on data intelligence basis to drive high volumes at an efficient price.

To part finance its working capital and general corpus fund needs and listing benefits, AIL is coming out with a maiden IPO of approx. xxx shares via book building issue. It has fixed the price band of Rs. 740-745 per share and mulls mobilization of Rs. 459 crore on the basis of the higher price band. The issue opens for subscription on 29.07.19 and will close on 31.07.19. For Anchor Investors, the issue is open only for a day i.e. 26.07.19. Minimum application is to be made for 20 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. AIL has allocated 75% for QIBs (including Anchor Investors), 15% for HNIs and 10% for retail investors. It is a combo offer of primary as well as a secondary issue. AIL is issuing approximately 1208060 fresh equity shares (at the upper price band) to mobilize Rs. 90 cr. Existing stakeholders are offloading 4953020 shares under offer for sale. Thus the total size of the issue will be Rs. 459 cr. and the shares to be issued at the upper price band will be 6161080 shares (approx). Issue constitutes 24.16% of the post issue paid-up capital of the company.

The issue is jointly lead managed by ICICI Securities Ltd. and Nomura Financial Advisory & Securities (India) Pvt. Ltd. while Karvy Fintech Pvt. Ltd. is the registrar to the issue.

Since inception till March 2015, AIL issued entire equity at par. In February 2017 it issued further equity under Scheme 2017 at mutually agreed consideration. The average cost of acquisition of shares by the selling stakeholders is Rs. 11.43 per share. AIL promoters have sold 285214 shares at Rs. 711.20 per shares to Malabar Value Fund and 1616214 shares at Rs. 720.51 per share to Malabar India Fund Ltd. in July 2018. Post issue, AIL's current paid-up equity capital of Rs. 24.29 cr. will stand enhanced to Rs. 25.5 cr.

Affle Holding, the Singapore headquartered parent entity is holding 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%.

For the last three fiscals, on a standalone basis, AIL has posted an average EPS of Rs. 4.67 and an average RoNW of 28%. On a standalone basis, AIL has posted 32.4% CAGR in revenues and 311% CAGR in EBITDA for last three fiscals.

The issue is priced at a P/BV of 39.11 on the basis of unconsolidated NAV of Rs. 19.05 as on 31.03.19 and at a P/BV of 25 on the basis of consolidated NAV of Rs. 29.81 as on 31.03.19. If they attribute FY19 standalone earnings on fully diluted equity post issue, then the issue is priced at a P/E of around 114 and on consolidated earnings, it is priced at a P/E of around 39 and on the proforma basis, it comes to 36.7 P/E. Thus prima facie, the issue is fully priced.

AIL is having a unique business model and has no listed peers to compare with. Its revenue includes nearly 70% global business and the rest from domestic markets. Considering its long term relations with renowned global and domestic clients and the ongoing business, management is confident of improving upon its performance going forward. Being the first mover in the segment, it might create a fancy post listing. AIL runs the asset-light business model with debt-free status. Investors may consider moderate investment for the long term.

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