Shares of Just Dial have had a good run at the bourses in the past year, going up close to 40%. Analysts at Kotak Securities see the stock continuing the upward momentum.
The Just Dial Analyst: Kotak Securities analysts maintained the “buy” rating for the stock raising the target price to ₹1,050 from ₹920. The target reflects an over 18% upside from the stock’s current market price of around ₹885.
The Just Dial Thesis: The brokerage firm said that in the December quarter, the company exhibited commendable performance across multiple dimensions, outperforming expectations in key areas. Notably, the surprise upside in the EBITDA margin signalled enhanced operational efficiency and adept cost management, contributing to the company’s overall financial health.
| Metric | December Quarter (FY24) | December Quarter (FY23) |
|---|---|---|
| Revenue | ₹265 | ₹221 |
| EBITDA | ₹60.4 | ₹27,2 |
| EBITDA Margin (bps) | 22.78% | 12.27% |
| Net Profit | ₹92 | 75.3 |
The EBITDA margin, showcased a notable improvement, reaching 22.8%. This exceeded initial estimates and contributed significantly to the overall enhancement of profitability. The reported EBITDA of ₹60.4 crore was particularly strong, surpassing Kotak’s estimates by 9%.
Another significant driver of the string numbers was the robust growth in realization and the successful implementation of paid campaigns. These factors played a pivotal role in driving higher revenues during the quarter, showcasing the company’s adeptness in revenue generation strategies.
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Furthermore, the quarter witnessed a noteworthy recovery in margins, surpassing expectations and indicating that the company’s measures to improve profitability were effective and prompt. The accelerated pace of margin recovery reflects the company’s resilience and adaptability to changing market dynamics.
Despite the positive momentum, the company maintained a status quo on the ramp-up of new initiatives during the quarter. The brokerage added that collections and deferred revenues demonstrated robust growth, with a 10% increase in collections and a substantial 17% growth in deferred revenues on a year-on-year basis.
Regional collection trends provided interesting insights, with collections from Tier 2+ cities outpacing those from Tier 1 cities. The brokerage said that this shift in dynamics suggests potential growth opportunities in untapped markets and diversification of the customer base.
Price Action: Just Dial’s share price was down 0.71% to trade at ₹886.50 in early trade on Tuesday.
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