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Just Dial shares climb 15% since Q3 earnings; what should investors do?

Just Dial shares climb 15% since Q3 earnings; what should investors do?

Just Dial shares rose 6.83% intraday to Rs 680 today against the previous close of Rs 636.50 on BSE. The mid cap stock opened at Rs 636.50 on BSE.

Just Dial stock has fallen 20% in one year but gained 12.24% since the beginning of this year. Market cap of the firm rose to Rs 5,686.44 crore. Just Dial stock has fallen 20% in one year but gained 12.24% since the beginning of this year. Market cap of the firm rose to Rs 5,686.44 crore.

Shares of search engine provider Just Dial ended 6% higher amid a market rally today. With today’s rally, Just Dial stock has gained 15.26% since Q3 earnings were announced last Friday. Just Dial shares rose 6.83% intraday to Rs 680 today against the previous close of Rs 636.50 on BSE. The mid cap stock opened at Rs 636.50 on BSE. The stock has fallen 20% in one year but gained 12.24% since the beginning of this year. In a week, the stock has gained 15.6%. Market cap of the firm rose to Rs 5,686.44 crore on BSE. Total 1.02 lakh shares of the firm changed hands amounting to a turnover of Rs 5,686 crore. Later, the stock closed 5.97% higher at Rs 674.50 against the previous close of Rs 636.50 on BSE.  

In terms of technicals, the relative strength index (RSI) of the stock stands at 66.7, signaling the stock is neither oversold nor overbought. The stock has a one-year beta of 1.2, indicating very high volatility during the period. Shares of Just Dial are trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

After the earnings, ICICI Direct has given a buy call on the stock with a target price of Rs 760 i.e. 23 times P/E on FY25E EPS.

"Just Dial generates revenues from advertisers on various subscription and fee-based packages. Reliance Retail Ventures now holds a 67% stake in JDL. JDL’s launch of B2B platform will be a key revenue driver in the long run," said the brokerage.

However, YES Securities is not so bullish on the Just Dial stock.  It has maintained reduce rating on the firm with a target price of Rs 615.

“We estimate revenue CAGR of 30.0% over FY22-24E with average EBIT margin of 12.5%. We maintain our REDUCE rating on the stock with revised target price of Rs 615/share based on DCF methodology. The stock trades at PER of 33.7x/15.8x on FY23E/FY24E EPS,”  said YES Securities.

On Friday (January 13), Just Dial reported a strong set of quarterly earnings, with EBITDA margins coming in highest in the last seven quarters. The company reported 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.

The earnings were announced after market hours on Friday (January 13). The stock closed at Rs 585.15 in the same session. Following the company's Q3 earnings, the stock rose 10 per cent intraday to hit a high of Rs 643.65 on January 16.

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 were 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.

Just Dial provides local search related services to users in India through multiple platforms such as Desktop/ PC website, mobile site, mobile apps (Android, iOS, Windows), over the telephone and text. In February, it has launched its B2B portal, Jd Mart, across various platforms for users.

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Published on: Jan 18, 2023, 4:36 PM IST
Posted by: Tarab Zaidi, Jan 18, 2023, 4:24 PM IST