Buy Just Dial; target of Rs 1260: ICICI Securities

ICICI Securities research report on Just Dial

Just Dial grew revenues in-line. 340bps QoQ EBITDA margin expansion was ahead of expectations. This was achieved by cutting employee expenses as bottom 10-15% of employees were churned out. This was aided by implementing automation in various parts of the business which contributed to lower manpower requirements. The annualised churn reduced by 300-400bps YoY despite an increase in the proportion of ‘monthly’ subscriptions aided by low ticket size and auto renewals. Management believes there is still room for margin improvement. We think that stock could re-rate to 14x 1-year forward EV/EBITDA (earlier 12x) given the sustained improvement in operating metrics over FY24. However, meaningful rerating is likely to happen when investors have better clarity on cash utilisation. Maintain BUY.

Outlook

We maintain BUY on the stock with a revised target price of INR 1,260 (from INR 1,101) based on 14x 1-year forward EV/EBITDA multiple as we roll over to FY26. Key risks: 1) Delay in launch of new initiatives; and 2) slower-than-expected growth in paid campaigns, listings etc.

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Just Dial - 19042024 - isc