With a market capitalization of Rs. 8,552 crores, the shares of a local search engine and digital services providing company started Tuesday’s trading session on a higher note at Rs. 1,017.85, gaining around 1 percent compared to its previous close of Rs. 1,003.20 and are currently trading at Rs. 1,008 apiece.
Financials
Having a look at the latest financial statements published by Just Dial, the revenues and profits have shown a positive movement.
Looking at Just Dial’s financial statements, the revenue (net of GST) increased marginally by around 2 percent from Rs. 265 crores duirng the December quarter to Rs. 270 crores in the March quarter. In addition, the net profits zoomed by 26 percent from Rs. 92.01 crores to Rs. 115.74 crores during the same period.
Comparing the same metrics on a YoY basis, the revenue increased by 16 percent from Rs. 233 crores in Q4FY23 to Rs. 270 crores in Q4FY24. On the other hand, the net profits magnified by 38 percent from Rs. 83.6 crores to Rs. 115.74 crores during the same period.
Key Metrics
Due to consistent operating revenue and profits on a YoY basis, the profitability metrics of the company improved with the return on equity (RoE) increasing from 4.43 percent during FY 22-23 to 9.02 percent in FY 23-24, and, the return on capital employed (RoCE) zoomed from 5.13 percent to 11.19 percent during the same timeframe.
Target
ICICI Direct one of the well-known brokerage firms has given a ‘Buy’ target on Just Dial’s stock with a target of Rs. 1,210 indicating a potential upside movement of around 20 percent compared to its current market price.
Reason behind the target
The investment rationale for providing such a recommendation pertains to a company’s focus on Tier 2/3 cities.
The management highlighted the increasing share of Tier 2 and 3 cities in the revenue stream. The average monthly ticket size for Tier 1 cities is Rs. 2,200, while for Tier 2 or Tier 3 cities it is approx. Rs. 1,100- Rs. 1,200.
Just Dial believes there is significant potential for ARPU growth in Tier 2/3 cities, given that they are currently priced at about 50 percent of Tier 1 cities.
Furthermore, Just Dial also expects the B2B segment to contribute 1/3rd of the total revenues in the next 1-2 years vs 26 percent currently, driven by JD Mart. The company has guided for more than 15 percent revenue growth on the back of volume growth and price hikes in FY25.
The broker indicated its belief that the company’s revenue is projected to achieve a compound annual growth rate (CAGR) of 15 percent from FY24 to FY26E, reaching Rs. 1,379 crores, in contrast to a CAGR of 3.2 percent from FY19 to FY24.
Moreover, Just Dial has projected a growth of over 30 percent in EBITDA for FY25, emphasizing increased revenue from key categories and regions. Resulting to this, ICICI Direct anticipates EBITDA margins of 24.5 percent and 26 percent for FY25 and FY26, respectively, compared to 20.8 percent in FY24.
Given the Just Dial’s focus on Tier 2/3 cities, Healthy volume growth, price hikes and other initiatives the brokerage firm initiated coverage with a ‘BUY’ rating with a target price of Rs. 1,210.
Just Dial provides local search-related services to users across India in a platform-agnostic manner. The multi-platform offering includes App (Android, iOS), mobile website, desktop /PC, voice and text.
Written By Vaibhav Patil
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