Shares of Reliance-owned Justdial have surged up over 14% since the company posted its results for the quarter ended March. Analysts at Kotak Securities see the stock going further up.
The Justdial Analyst: Analysts at Kotak Securities maintained the “buy” rating for the stock raising the price target to ₹1,150 from ₹1,050. The target indicates an around 14% upside from the stock’s last closing price of ₹1,009.35.
The Justdial Thesis: In its latest stock report, the brokerage said that the company’s improved margins due to cost rationalization resulted in a positive margin surprise. The firm’s revenue growth has been fueled by balanced growth in both realization and paid campaigns, the analysts added. The brokerage also highlighted that the recovery in margins has been faster than expected.
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Just Dial recorded revenue growth of 16.2% year-on-year (YoY) and quarter-on-quarter (QoQ). As per the brokerage, this growth was propelled by realizations of approximately ₹18.5k, marking a 7.2% yoy increase, and campaign additions of around 14k, up by 8.4% yoy.
The EBITDA stood at ₹70.6 crore, surpassing Kotak Securities’ estimate by 11%. The EBITDA margin was reported at 26.1%, beating the brokerage’s estimate of 23%.
However, Kotak Securities expresses concerns regarding Just Dial’s approach to its long-gestation projects. The firm’s unwillingness to invest in or refine the business models of these projects raises doubts about the success and confidence in its new initiatives, the domestic brokerage said.
Price Action: Just Dial’s share price was up 2.61% to trade at ₹1,035.70 in the early hours of trading on Friday.
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