September 6, 2021

BRIGHTCOM GROUP LIMITED

STOCK SNAPSHOT:
CMP 37.25 Rs. | MCAP: 3880 Crore | EPS: 4.68 Rs (POST DILUTION)
EXPECTED EPS for FY2021-22: 8.85 Rs. | P/E: 7.59 | Dividend Yield: 0.11%
ROE: 15.9% | ROCE: 21.6% | BOOK VALUE: 31.3 Rs | P/BV: 1.1

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This is an update to our recent research report on Brightcom Group Limited.

Since we last published our fundamental and technical analysis of BCG, there have been
interesting developments on both fronts.

Before we dive into those developments, here is some additional research on the company.

 We continue to study the industry and company to the granular levels with time.
 We have identified some interesting facts about the company.
 We wouldn't be wrong to call Brightcom a fast-growing SaaS player in AdTech sector.

It offers multiple platforms to monetize the Advertising traffic. A brief description and link to
details are below.

• Compass
It is their flagship platform/Ad Exchange,
which connects the publishers with
advertisers and all those in between for
exchange of traffic. It allows for easy
integration and maximum yield over video
and display, both on mobile and desktop. It
also provides facilities like Real Time
Bidding, Tag integration and Header Bidding
in it.

• B-Local
It is a Niche Platform (News media ad
Exchange) which partners with multiple
local news media publishers to monetize
their traffic by offering it to advertisers

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• AudienciAD

It is their platform that is geographically

focused on LATAM area and offers all the
COMPASS has to offer globally. Being a
focused exchange, it helps advertisers to
connect better with local publishers in
LATAM region.

• VoloMP

It is a Bulk email delivery Platform which

Offers paid subscription Packages to its
Corporate clients.

With these multiple platforms, we believe Brightcom is technically well positioned to grow
exponentially in this sector. To give you the insight on their growth we are providing some
additional research data below.

In this Update we are adding some third-party data available freely on internet, that helped us
understand the scale/growth of the business.

Builtwith and Adauth offer extensive data on ad tech players which in a way authenticates the
business of these ad tech players.

Take a look at below shared images to which we have provided links, which show us that
Brightcom works with minimum 50000+ publishers of which ~90% are direct accounts, which
we understand provides handsome margins and better relationship with publishers.

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Below Builtwith data shows us the growth of the Brightcom's ad exchange since 2017 in the Top
10k, 100k and 1 M websites.

• Usage statistics of Top 10K websites:

• Usage statistics of Top 100k websites:

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• Usage statistics of 1M websites:

Apart from this, on Builtwith one can access the list of websites Brightcom currently works
with. We recommend readers of this updated report to visit the website through the following
link provided below.

https://trends.builtwith.com/ads/Brightcom-Direct

To further add to this, Adzerk Report (Another third-party analytics had ranked Brightcom in
their ads.text report recently, the images to which we have added below.

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Fundamental Developments:

 Company has declared Dividend of 2.5% (5 paisa/share)

 Company has awarded Bonus shares (1:4)

 Gave LOI (Letter of Intent) to the target company due for Acquisition subject to due
diligence by E&Y.

 Company is raising funds from FPIs to the scale of 370 Crore through preferential issue
at Rs. 31.2 / Share. (FPI’s will not be getting any Bonus shares.)

 Company has successfully set up ESOP trust

 Company has declared Q4 FY21 results, audited annual results for FY21 and Q1 FY22
results (As disclosed to exchanges)

Most importantly, Company has provided the forward-looking Revenue and Earnings
Guidance for remaining quarters of FY 2021-22:

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REVENUE AND EARNINGS GUIDANCE AT A GLANCE:

QUARTER 3 | FY 2021-22
QUARTER 2 | FY 2021-22

QUARTER 4 | FY 2021-22
REVENUE AT 1100 - REVENUE AT 1890 - REVENUE AT 1350 -
1150 CRORE. 1970 CRORE. 1410 CRORE.

EBIDTA AT 335 - EBIDTA AT 680 - 620 EBIDTA AT 410 -

360 CRORE. CRORE. 440 CRORE.

PAT AT 190 - 215 PAT AT 330 - 370 PAT AT 230 - 260

CRORE. CRORE. CRORE.

EXPECTED GROWTH RATE FOR FY 2021-22 IN COMPARISON TO PREVIOUS

YEAR 2020-21:
(COMPARISON IS DONE ASSUMING COMPANY ACHIEVES THE REVENUE AND EARNINGS GUIDANCE NUMBERS)

FY 2020-21 FY 2021-22
REVENUE TO REVENUE: EXPECTED REVENUE:
GROW BY 75% 2856 CRORE. 5000 CRORE.

FY 2020-21 FY 2021-22
PAT TO GROW PAT: EXPECTED PAT:
BY 97% 483 CRORE. 950 CORE

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Based on current fundamentals of the company we are deriving the valuations as below:

• Value determination on the basis of Net Earnings:

Considering a Forward EPS of ~9 Rs, if we would discount the earnings in the range of
20-30(PE Ratio)

o At 20x, Price should be 180 Rs

o At 30x, Price should be 270 Rs

• Value determination on the basis of EV/EBIDTA:

Currently the AdTech companies are being valued at an average of 14 to 15 x EBIDTA.

Forward EBIDTA of FY2021-22 is around 200 MM $.

Valuation comes out to be USD 3 billion if we discount 9 months ahead earnings. i.e.

o A Market Capital of Rs. 22000 Crore and a Target Price of 188 Rs.
(Equity considered is 117 Crore after full dilution including FPI)

Technical Analysis:

After a decent correction, the 10 DMA has crossed over 21 DMA, once stock manages to cross 45 Rs. on weekly closing basis, it
should see a strong upward momentum immediately towards 65 - 75 Rs while maintaining a SL of Rs. 27.

 Price has successfully moved and sustained above 30 Rs on monthly closing chart thanks
to significant buying demand.

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 Rerating of the stock should continue with demand to get stronger and supply to remain
limited thanks to strong fundamentals and updates like Earnings guidance for FY22.

 We chose to remain dynamic in assessing the move of the stock in staged manner.
Conservatively we are looking at an Immediate Target Price of Rs. 65 – 75 within a Time
Frame of 2 – 3 months.

Anticipated developments to look for, which may further strengthen the stock valuations are:

 Acquisitions.

 Consistent Pledge Release by Promoters.

 Resolution of DAUM/KAKAO issue on Lycos.

Over long term the stock should rerate to its fundamentally justifiable valuations and
future outlook.

Report prepared by:

Preeti Merwade
NISM Certified Research Analyst
NISM-202000084117

Disclaimer: This Advice/ opinion /research /recommendation / document has been prepared and
issued by the above Author/ Analyst on the basis of publicly available information, Company
published Reports and other sources believed to be reliable. While all care has been taken to ensure
that the facts stated are accurate and the opinions given are reasonable, the analyst shall not be in
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The analyst will not be entitled to the profit or loss incurred by reader of this research report.