#EBITDA #GROWTH 5 Year CAGR 38.6%

In FY24, the EBITDA stood at ₹360 cr, recording a growth of 24.7% YoY. The data & inventory cost (~61% of revenue) and employee costs (~13% of revenue) increased significantly on a YoY basis in line with the revenue growth. They continued to strategically invest in the inventory and data costs as they are calibrating their platform to premium inventory touchpoints. In H2 FY24, the management increased their spending on marketing cost and trade events in the international markets. They would continue to spend in FY25 as well. During Q1 FY25, the EBITDA stood at ₹104.5 cr, recording a growth of 33.8% YoY on account of improved operational efficiencies.

#PAT #GROWTH 5 Year CAGR 43.5%

In FY24, the PAT stood at ₹297 cr, recording a growth of 20.8% YoY. During Q1 FY25, the PAT stood at ₹86.6 cr, recording a growth of 30.9% YoY. Effective tax rate stood higher for the company at 18.7%, and this is going to be the new standard for them.

#EBITDA #MARGIN

in FY24, the EBITDA margin contracted by 61 bps YoY and stood at 19.5%. During Q1 FY25, the EBITDA margin stood at 20.1%. On a YoY basis, there has been a marginal expansion in the EBITDA margin by ~89 bps.

#Management #Comments

The management has a vision to develop the market share and build a robust portfolio of services that will help them to get long term sustainable growth. With the Affle 2.0 strategy, the management is focusing on being a leader in the Indian market, verticalization of AI innovations, penetrate vernacular section of India and create an omni-channel connected ecosystem. The recent fund-raising activity will help to build a robust business structure in the future either through organic or inorganic routes. During the quarter, the management appointed four new board of directors to provide accountability and enhance the depth of expertise.

#Company #Potential

The total global digital ad spend is expected to increase at a CAGR of 16% from $381 bn in 2020 to $785 bn by 2025. • The global average digital ad spend as a percentage of total advertising market is ~63%. • The total advertisement industry in India is expected to grow at a CAGR of 15% from ₹85,769 cr in 2022 to ₹1,13,575 cr by 2025. • The digital ad spends in India as a percentage of total advertising market is ~35% in 2022 which is expected to increase to 42%45% by 2024. This growth is attributed to the consistent improvement in digital infrastructure, government’s push to boost the digital economy, growing internet penetration, rise in smartphone adoption, innovation in mobile technologies and increased adoption of digital payments. • The total digital ad spend in India is expected to grow at a CAGR of 30% from ₹29,784 cr in 2022 to ₹51,110 cr by 2025. • E-Commerce & FMCG makes the biggest contribution to the digital media industry. • Among the digital media advertising format, social media & online video format has been the largest. Online video has seen a strong growth owing to the low-cost smartphones and a high-speed connectivity in India. • Connected TV (CTV) devices represent a growing advertising opportunity thanks to the expansion of free ad-supported streaming TV (FAST) services and the continued growth of premium online video. However, CTV ownership in India is far behind other markets with only 10% of homes owning a CTV set, due to the growth of adoption and usage of smartphones, which had a 60% penetration of population in 2022 that could increase up to 80% in 2026.

#Company #Outlook

Affle 2.0 strategy aims to reach 1,000 crore+ (v/s current 250 crore) connected devices including mobile smart phones, connected TV, smart wearables etc. to enable integrated omni channel online and offline consumer journeys. This strategy would be anchored on: 1) OEM (original equipment manufacturers) partnership – Affle has integrations with most of the 20 OEMs and operators across ecosystem players like Bobble AI keyboard app, 2) Vernacular – target users in their preferred language with ability to detect mixed vernacular language affinity (e.g.: Hindi + English) and 3) Verticalization – deeper integration within consumer internet focused verticals. • Focus on improving scale: The company has a dominant position in India (the largest market) and is consistently working to grow in scale significantly enhancing the strategic moats by focusing on three key aspects: 1) expanding the scope of the products from just mobile to connected devices, going well beyond mobile and looking at connected devices as a strategic focus, 2) looking at the consumer’s journey as an omni channel platform, integrating it across both online journeys as well as offline journeys and therefore creating new possibilities for the customers, and 3) continue to invest in the 2V strategy of Vernacular and Verticalization to reach the next billion shoppers on connected devices. They also have a selective approach while scaling up the consumer platform. • The management guided that they would be focusing on broad segment growth and reduce their overdependence on a particular vertical. • They have realigned their strategy in the developed markets like reorganization of team, focus on lock in's on product & platform for multi year growth, connected TV product with household sync capabilities. These changes is expected to result in some turnaround Q2 FY24 onwards.

#Future #Plan

Focus on improving the conversions: Affle is consistently focusing on scale, growing the number of conversions, getting higher wallet share and focusing on consumer proposition which would help it to improve the CPCU rates and hence the revenue. For this, the company is investing into synergetic acquisitions as a part of Affle 2.0 strategy. • Compliance with data-privacy regulations: The company has been abiding to the stringent data-privacy regulations set by Singapore Government and some of the European standards. It is also among the few companies that has been accredited for its entire tech stack by Infocomm Media Development Authority of Singapore (IMDA) under the SG. It also appoints external auditors impact. such as Grant Thompson, Privasec etc for data privacy audits. The company also received Data Protection Trustmark (DPTM) Certification for a period of three years by IMDA, which notably enhances the customers' trust, builds greater strategic moat and fosters growth. • Integration with Jampp to aid the topline: Jampp has ~50% penetration in the iOS devices. Hence, post the implementation of stringent data privacy rules, it was among the early movers in adopting SKAN (SKAd Network is a privacy centric API operated by Apple which helps measure ad activity on an aggregated level). Using this technology, Jampp drove 41% more efficient conversions in SKAN campaigns v/s Android only, for its client fetch. • The company's system are designed and geared to process only the appographic, behavioural and intent signals of customers without having any access to a user's personal and financial information. Hence, data protection bill would hopefully not have any • They have raised funds from Gamnat Pte. Ltd, which is an entity of the Ministry of Finance, Government of Singapore to invest ~₹750 cr in the company. This will strengthen the next 4 years of strategic growth initiatives.

Affle (India) Ltd 1350-1550
Expected level 1880
Support 1200

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Alpha Ideas 20 20 Meet - 2024 Edition

1. Indostar Capital - Danesh Mistry

2. Hawkins India - Prajesh Maroo

3. NSE India (Unlisted) - Pritesh Vora

4. Cantabil Retail - Anshul Saigal

5. JM Financial - Jatin khemani

6. HIL Limited - Jiten Parmar

7. Greaves Cotton - Tushar Bohra

8. Sunteck Realty - Rushmik Oza

9. KRN Heat Exchanger - Abhisar Jain

10. Shankara Building Products - Abhinav & Raghav Aggarwal

11. Sai Silks Kalamandir - Ashwini Agrawal

12. Welspun Corp - Rakesh Laroia

13. Arvind Smartspaces - Ishmohit Arora

14. India Shelter Finance - Darshan Deora

15. E2E Networks - Sivaramakrishnan R

16. SAREGAMA INDIA - Aashish Upglanawar

17. MOIL - Digant Haria

18. Atlanta Limited - Ankit Kanodia

19. PG Electroplast - Vivek Mashrani

20. HBL Power and Atul Limited - Abhishek Basumallick

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Maharashtra NDA Win Beneficiary Companies

1. Gala Precision Engineering Ltd

2. CESC Ltd

3. Capacite Infraprojects Ltd

4. PNC Infratech Ltd

5. Ashoka Buildcon Ltd

6. KNR Constructions Ltd

7. CESC Ltd:

8. BIGBLOC Construction Ltd

9. GE Power India Ltd

10. NBCC (India) Ltd:

11. HPL Electric & Power Ltd

12. Ceinsys Tech Ltd

Disclaimer: Please do your own due diligence. This is not buy/sell recommendations

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Siemens Company Details

Siemens is a technology company focused on industry, infrastructure, mobility, and healthcare. Siemens (India) Limited was incorporated in the year 1922 as a private limited company and currently, is the flagship listed company of Siemens AG in India. The company operates in 4 segments: Energy, Smart infrastructure, Digital industries & Mobility and follows a financial year of October-September. Energy segment provides fully integrated products, solutions and services across the energy value chain of oil and gas production, power generation and transmission for various customers. Smart infrastructure portfolio covers systems for low & medium voltage distribution, solutions for smart grids & energy automation and low voltage power supply systems. Digital industries contains portfolio of leading-edge automation, drives and software technologies covering the complete life cycle from product design and production execution to services for discrete and process Industries. Mobility segment is a supplier of solutions for passenger and freight transportation including rail vehicles, rail automation systems, rail electrification systems, road traffic technology and IT solutions. The company is positioned along the electrification value chain – from power generation, transmission and distribution to smart grid solutions and efficient application of electrical energy. During the year, the company’s major highlight was securing an order valued at ₹26,000 crore to supply 1,200 locomotives for the Indian railways. This has been the largest order in the history company. Also, it had acquired the EV division of Mumbai-based MassTech Controls Private Limited, primarily engaged in design, engineering and manufacturing of a wide range of alternate current chargers.

#SALES #GROWTH 5 Year CAGR 8.9%

n FY23 (Oct 2022-Sep 2023), net sales grew by 21% YoY to ₹19,554 cr. The company witnessed strong demand across all the sectors. The increase was backed by pent-up demand, high commodity prices and increased competitiveness. During the year, new orders grew by ~139% YoY to ₹46,383 cr and order backlog as of 31St September 2023 stood at ₹45,523 cr. During 9M FY24, sales grew by 15% YoY to ₹15,779 cr, backed by project executions and growth in mobility, smart infrastructure and digital industries businesses. New orders stood at ₹17,400 cr during the period, supported by smart infrastructure, mobility and energy segments. However, it witnessed lower order intake in the digital industries segment. Going ahead, government spending on infrastructure and rising demand for the products is expected to bring momentum across segments.

#EBITDA #GROWTH 5 Year CAGR 13.4%

In FY23, EBITDA stood at ₹2,487 cr, up by 42% YoY. Company observed a growth on account of rising sales volume across different segments. Major expenses for the company constituted project bought outs 27%, purchase of traded goods 23% and cost of materials 20%. In 9M FY24, EBITDA grew by 21% YoY to ₹2,166 cr. As a % of revenue, cost of raw materials and employee benefit expenses witnessed an improvement that led to the growth. Going forward, it might witness a downward trend in the commodity prices and the business is expected to be in line with the market growth.

#PAT #GROWTH 5 Year CAGR 16.8%

In FY23, PAT increased by 55% YoY to ₹1,962 cr, mainly driven by higher volumes, better price extraction and positive forex & commodity effects. On a YoY basis, the other income increased by 61%. In 9M FY24, PAT grew by 36% YoY to ₹1,887 cr, backed by improved operating profit, higher other income and lower effective tax rate. Other income grew by 83% YoY on account of sale of property of ₹221 cr during 9M FY24 v/s ₹24 cr in 9M FY23 & dividend received from subsidiaries of ₹146 cr v/s ₹78 cr in 9M FY23. Going forward, increased demand for automation & digitalization, introduction of innovative solutions, strategic acquisitions and government’s stimulus spending on infrastructure would drive topline growth, which would further lead to growth in profits.

#EBITDA #MARGIN

In FY23, EBITDA margin expanded by 183 bps YoY to 12.7%, backed by higher operating profit. In 9M FY24, EBITDA margin expanded by 79 bps YoY to 13.7% led by gross margin expansion of 259 bps YoY, largely due to decreasing cost of raw materials and employee benefit expenses. Segment-wise during 9M FY24, smart infrastructure expanded by 299 bps YoY to 13% v/s 10% in 9M FY23; energy expanded by 158 bps YoY to 13% v/s 11% in 9M FY23; mobility expanded by 21 bps YoY to 7% v/s 6% in 9M FY23. While digital industries and portfolio companies witnessed a contraction of 211 bps and 337 bps YoY to 13% and 9%, respectively v/s 15% and 13%, respectively in 9M FY23. In the near term, the company’s increased focus on digital software is expected to be margin accretive.