Brokerages are largely mixed on the stock’s prospects going ahead.
offers local search and e-commerce services through its website, mobile apps and telephone line. It also owns a B2B platform JDMart.
Despite its marketing campaign, JDMart engagement is underwhelming, which underscores the hypothesis that displacing the leader in a network effect-led business is tough, said Edelweiss Securities, as it cut FY22 EPS estimates by 28 per cent and FY23 by 17 per cent citing escalating costs, higher investments and slower monetisation.
Edelweiss said it still does not have much clarity on how Just Dial fits in the new promoter’s ecosystem. The brokerage here was talking about Reliance Retail’s acquisition of Just Dial.
“Although possibilities are plenty, given lack of details and execution challenges, we are not building them in our estimates,” it said.
The broking firm has a reduced rating on the company with a target of Rs 812. On Friday, it traded at Rs 823.20, down 5.02 per cent. The stock has fallen 12 per cent in last five days of straight fall.
The company reported a 30.48 per cent YoY drop in net profit at Rs 32.9 crore for September quarter compared with Rs 47.30 crore in the same quarter last year.
Net sales declined 6.87 per cent to Rs 156 crore from Rs 167.50 crore YoY.
A negative operating leverage drove weaker-than-expected Ebitda margins of 10.2 per cent. The company had reported Ebitda margin of 26.7 per cent in the year-ago quarter. Kotak Institutional Equities pegged it at 17.4 per cent. Ad-spends declined sequentially as the company curtailed spends.
“Ad-spends will pick up by March quarter as the company will look to market JD and JD Mart apps. Overall, Ebitda miss drove a 20 per cent net profit miss also,” Kotak said.
YES Securities, without offering any target, said Just Dial’s performance was below expectation both in terms of financial and operating metrics, suggesting the company continues to face high competition from Google, Facebook and other vertical and horizontal players. This brokerage also has a ‘reduce’ rating on the stock.
Kotak has revised down its target to Rs 1,010 from Rs 1,130 on concerns over rise in near-term cost, even as it retained ‘add’ rating on the stock.
“Value creation from Just Dial’s new platforms and synergies from RRVL’s acquisition of 67 per cent stake will take time to fructify though change in stance over core investments is a positive,” it said.
