Target: ₹2,240
CMP: ₹1,584.40
Affle 3i’s fourth-quarter performance surpassed expectations, recording a year-on-year revenue growth of 20.3%, driven primarily by strong contributions from India and emerging markets, which increased by 21.2%. This growth stemmed from enhanced customer engagements, the addition of new clients, and sustained momentum across key industry verticals and geographical regions. Revenue from developed markets rose 18% year-on-year, benefiting from the realization of deferred revenues. The gross margin decreased by 114 basis points to 38%, attributed to discretionary investments aimed at expansion. However, the EBITDA margin improved by 120 basis points year-on-year, reaching 22.5% for FY26, moving closer to the company’s guidance of 23-24%.
The company is poised to enter a pivotal phase focused on scaling its revenue in the AI-driven advertising ecosystem. Management’s strategy for inorganic growth in developed markets is viewed as structurally advantageous. Affle anticipates a near-term revenue growth rate of approximately 20%. Despite a 14% decline in stock value over the past six months, the EBITDA margin is expected to stabilize within the 23-24% range, ensuring healthy earnings visibility. Performance advertising, led by cost-per-click (CPC) models, is considered relatively insulated from macroeconomic pressures that may affect brand-led advertising spending.
The recommendation remains a ‘Buy’ with an unchanged target price of ₹2,240. Revenue estimates for FY27-28E are maintained, although earnings per share (EPS) estimates have been revised downwards by 10% due to a high base of other income in FY26.
Potential near-term risks include challenges related to execution and integration, as well as the risk of margin dilution if acquired firms exhibit structurally weaker profitability, similar to patterns from previous acquisition cycles.
Published on May 12, 2026
