The issue for Affle is this according to me.
They were routing their businesses via Dubai and not paying much tax. Now they have made an acquisition Jampp which has a presence in Latin America and North America. While Jampp will make losses, the IP sitting in Dubai will have to be moved to Latin America and North America so effective tax rates will go up. FY21 company delivered 135crs profits. I believe almost 25crs is exceptional in that. So on a 110crs base because of higher effective tax rates company cannot grow more to more than 130-140crs profits in FY22E. So company trading at > 80x P/E on FY22E
80x P/E might be okay for a company growing 50-60%…but not for one growing 25-30%.
1QFY22 may not be impacted because of higher taxes. But from 2QFY22 it can impact numbers. So dont you think the stock will correct more? Views and insight invited…