Just Dial shares rally 10% after Q3 results. ICICI Securities sees stock at Rs 750 level

Shares of Just Dial rallied 10 per cent in Monday's trade after reporting a strong set of quarterly results, with Ebitda margin coming in highest in the last 7 quarters. The company logged a three-fold jump in its consolidated net profit at Rs 75.32 crore for the December quarter compared with Rs 19.39 crore in the corresponding quarter last year. Revenue for the local search platform jumped 39.32 per cent YoY to Rs 221.37 crore for the quarter compared with Rs 158.89 crore in the same quarter last year.

ICICI Securities said the execution of e-commerce business opportunities currently being piloted by the company is a key monitorable and any potential upside from the same is yet to be priced in.  At current valuation, the stock is trading at 5 times 1-year forward EV/Ebitda, which is significantly below historical levels, the brokerage said while suggesting a target of Rs 750 on the stock.

JM Financial said Just Dial's results were strong with cash collections standing at Rs 245 crore, highest in the last 15 quarters, led by strong sales team ramp-up. Deferred revenue improved by a healthy 23.5 per cent YoY to Rs 402 crore, even though the company signed up most of its new customers on monthly payment plans, JM Financial said.

The brokerage said valuations are also very benign as the stock is trading at 6.1 times FY24E EV/Ebitda, significantly lower than 32 times multiple for its nearest listed peer Indiamart. JM Financial expects a near-term up-move in the stock price, but the company at some point will have to aggressively start supporting its new initiatives, which could adversely affect its margins as well as cash flows, JM Financial said.

"Due to uncertainties related to such investments, we maintain our ‘HOLD’ rating while continuing to value the stock based on 15 times March 2025E core business EPS + FY23 end cash to derive our target price of Rs 660 Rs 650 earlier," it said. Following the company's Q3 results, the stock rose 10 per cent to hit a high of Rs 643.65 on BSE.

"Ebitda margin expanded 900 bps YoY in Q3 due to strong operating leverage. Ebitda stood at Rs 27.2 crore, a beat on JMFe by 40 per cent. PAT level beat on JMFe was 75 per cent due to better-than-expected operating profit as well as treasury gains. While we retain ‘HOLD’ due to uncertainties related to investments in new initiatives (JD Mart, JD Xperts, JD Shopping, and JD Real Estate), investors can play the stock for near-term up-move on the back of strong recent results and inexpensive valuations," JM Financial said.  This brokerage has a target of Rs 660 on the stock, noting that cash accounts for 80 per cent of the company's market cap.

Just Dial said that total traffic of unique visitors for the quarter rose 9.8 per cent to 15.68 crore on a year-on-year basis with 85.5 per cent traffic originating on mobile platforms, 10.9 per cent on desktop and PC, and 3.6 per cent on its voice platform.

The company board of Just Dial has also appointed Anshuman Thakur and Dinesh Taluja as additional directors.

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