Singapore Govt Subsidiary to Buy 5% in Affle India, Stock Falls 2%

Affle India share price dropped more than 2% in opening trade on 26, October. After the company's board approved of issuing of preferential shares to Gamnat Pte. Ltd, which is a step-down subsidiary of the Minister for Finance, Government of Singapore.

Key Details

•    The company plans to issue 69 lakh equity shares, representing nearly a 5% stake, to the Singapore-based entity at ₹1,085.54 per share.

•    Floor price for this issuance is set at a nearly 6% premium to the stock's closing price on October 25.

•    Total value of the preferential share issue is estimated at approximately ₹749.02 crore.

After the share issuance, Gamnat Pte., a unit of the Government of Singapore, will own a 4.92% stake in Affle India. As of the September quarter shareholding pattern, the promoters of Affle India held a 59.89% stake in the company. Public shareholders include Malabar India Fund, with a 2.9% stake, as well as funds like ICICI Prudential India Opportunities Fund, Nippon Life India Trustee Ltd., and ICICI Prudential Life Insurance Co.

However, Affle India did not disclose how it intends to utilize the proceeds generated from this preferential share issue. Affle India had previously raised funds in December 2022 through a preferential issue of up to 35 lakh shares to facilitate potential inorganic growth.

Stock Performance

Affle India's shares have been facing pressure recently, with a 7% decline over the past month. This is likely due to weakness in the information technology services sector in which the company operates. Over the past year, the stock has decreased by 15%, and it has fallen by 6.6% since the beginning of the current year. Stock is up 500% in 5-year time frame.

As of now, the stock is not in an oversold or overbought condition based on technical charts, with its relative strength index (RSI) at 33.9, stock reached a 52-week high of ₹1300 on November 18, 2022, and a 52-week low of ₹875.25 on May 15, 2023.

Financial Performance

In August, Affle India reported profit of ₹66.17 crore, a 20.3% increase compared to the corresponding quarter of the previous year. Revenue from operations reached ₹406.58 crore, marking a 17.0%  increase compared to the first quarter of FY23.

Business Model

Affle India specializes in providing mobile advertising services and information technology and software development services for mobile devices, company uses consumer intelligence to transform advertisements into recommendations, helping marketers connect with their target audience.