- Revenue surged 19.2% YoY to ₹718 cr, driven by AI‑powered ad inventory.
- EBITDA margin hit 22.7%, the 7th straight quarter of expansion.
- Stock jumped >4% on a bearish market day – a classic contrarian cue.
- Real‑money gaming regs and higher data costs pressure short‑term margins.
- Technical chart shows bullish engulfing; next resistance ~₹1,480.
You missed the fine print on Affle 3i’s AI thrust, and that could cost you a multibagger.
Affle 3i Q3 FY26 Performance Highlights
The ad‑tech firm posted ₹718 crore revenue for the quarter, up 19.2% year‑over‑year and 10.9% sequentially. EBITDA climbed to ₹163 crore, a 24.1% YoY rise, while profit after tax reached ₹119 crore, up 19.1% YoY. Crucially, the EBITDA margin expanded to 22.7%, marking the seventh consecutive quarter of margin improvement.
Geographically, emerging markets (India + other EM) contributed 73.9% of revenue, growing 19.8% YoY, while developed markets added 26.1% with 17.8% YoY growth. Operating cash flow for the nine‑month period stood at ₹254 crore, yielding an OCF‑to‑PAT ratio of 75.8%.
Why Affle 3i’s Margin Expansion Beats AdTech Sector Trends
Across the global ad‑tech landscape, average EBITDA margins are hovering around 18‑20% as inventory costs and data acquisition fees rise. Affle’s 22.7% margin signals a competitive advantage: the company is leveraging AI‑driven audience matching to command higher CPMs (cost per mille) while keeping cost‑of‑goods‑sold in check.
However, the filing flags two headwinds. First, India’s new real‑money gaming regulations trimmed ad spend in that vertical, a short‑term revenue drag. Second, data‑related inventory costs spiked to 62.4% of total spend, squeezing gross margins. The firm acknowledges that heavy investment in data infrastructure will temporarily dent profitability but expects a “scale‑up” effect as AI models become more efficient.
Competitor Landscape: How InMobi and Reliance Jio React
Affle’s peers – InMobi, Reliance Jio Platforms, and the emerging player ShareChat – are all racing to embed AI into their demand‑side platforms (DSPs). InMobi reported a modest 8% revenue rise in the same quarter, citing slower programmatic spend in Europe. Jio’s ad‑tech arm, meanwhile, is expanding its AI‑based audience clusters, but its margin sits at 16% due to higher carrier‑grade data costs.
Affle’s ability to grow both top‑line and margin simultaneously puts it ahead of the curve. Investors should watch whether competitors can replicate the AI‑engine efficiency or will be forced into price wars that erode profitability.
Historical Patterns: What Past Growth Spurts Taught Us
Affle’s eleven‑quarter streak of sequential top‑line growth mirrors the 2019‑2020 surge of programmatic advertising in India, when mobile internet penetration crossed 500 million users. In that period, companies that reinvested earnings into data capabilities (e.g., InMobi’s 2019 acquisition of data‑analytics startup) enjoyed a 3‑year average share price appreciation of 45%.
The lesson is clear: aggressive reinvestment during a growth tailwind can translate into outsized shareholder returns, provided cash conversion stays healthy – a metric Affle currently meets with a 75.8% OCF‑to‑PAT ratio.
Technical Signals: Bullish Engulfing and Support Zones
On the daily chart, Affle formed a classic bullish engulfing candle on Friday, suggesting strong buying pressure. The immediate support sits at ₹1,300; a break below could test ₹1,250. Conversely, holding above ₹1,380 opens the path to the next resistance cluster around ₹1,480‑₹1,500, a level that aligns with the 52‑week high.
Volume surged 38% relative to the 10‑day average, reinforcing the conviction behind the move. For momentum traders, the risk‑reward ratio looks attractive if the stock can sustain above the ₹1,380 threshold.
Investor Playbook: Bull vs. Bear Cases
Bull Case: Continued AI‑driven inventory upgrades unlock higher CPMs, margin expands to >24% in FY27, and international ad spend rebounds post‑geopolitical easing. Stock could rally 30‑40% to the ₹1,800‑₹2,000 range within 12 months.
Bear Case: Regulatory clampdown on gaming and data‑privacy concerns bite deeper, pushing inventory costs above 65% and compressing margins below 20%. A pullback to the ₹1,200‑₹1,250 zone is plausible, with a longer‑term downside if cash conversion deteriorates.
Given the current risk‑reward asymmetry, a phased approach works best: acquire near the ₹1,300 support, add on any pull‑back to ₹1,250, and trim partially at ₹1,500 to lock in gains while staying positioned for the upside.
In summary, Affle 3i blends solid fundamentals, AI‑powered growth, and a technically favorable entry point. Investors who respect the short‑term headwinds but focus on the long‑run AI ad‑tech runway could be sitting on a future multibagger.