Just Dial shares erase gains after hitting fresh 52-week high; JM Financial maintains ‘buy’ on compelling valuations

Shares of Just Dial in Friday’s trade amid broad-based market sell-off witnessed selling pressure after marking its fresh 52-week high of Rs 1034.6 per share on the BSE.

At around 10:26 am, shares of the company traded with a cut of over 1 per cent at Rs 998.5 apiece on the BSE. The company’s shares over the last two days have climbed over 16 per cent to Rs 1035 apiece today as against its price of Rs 891 as on April 16.

In its report domestic brokerage JM Financial said that the company reported its eighth consecutive quarter of sequential margin expansion, a cumulative improvement of 30 per cent points during this period. In 4Q, EBITDA margin improved 3.4ppts QoQ (+11.9ppts YoY) to 26.2%, a beat on the brokerage estimates by 218bps, on the back of strong cost-control measures. Revenue growth was also decent at 16.2% YoY (+2% QoQ).

The company saw addition of 16.7k paid campaigns QoQ, the highest since 3QFY23, while average realisation was flat sequentially. 

Cash collections (+13.8% YoY) and unique visitor traffic (+7.4% YoY) too reported sequential acceleration. In FY24, while paid campaign growth was broadly similar across B2B2C and B2B businesses, the brokerage continues to postulate that B2B share in revenue/campaigns will improve over the next 2-3 years. The management expects revenue to grow in mid-teens in FY25, led by an equal mix of paid campaigns and realisation.

EBITDA growth next year should be even stronger as impact of margin expansion in recent quarters is yet to come in the base.

Valuations also remain compelling at 15.7x/13.5x FY25/FY26 ex-cash EPS despite the sharp recent up-move in the stock price. Hence given the above tailwinds, the brokerage continues with its buy rating and a target price of Rs 1160, a decent potential upside of 15 per cent.