Just Dial Ltd. share price target

Just Dial (JD) reported 4QFY18 revenues in-line with our estimates. However, EBITDA was below estimates due to a strong sales headcount addition even as a rationalisation of other costs, including advertising and promotion (A&P;), continued. JD has expanded the coldcalling sales team by 23% over the last two quarters to drive penetration in tier 2/3 cities. However, the success has been limited so far; 2.2% YoY net addition in 4Q18 in paid-listings was the lowest ever. We suspect a concurrent attrition in extant client base, especially in the core markets of tier1 cities. We believe it's tightening of the A&P; spend ostensibly to manage margins could hurt in the medium term given the aggressive cash-burn by most of the domain-specific apps. Thus, we maintain our soft revenue growth outlook though the...

Paid listings growth slows down; we expect a 21.4% CAGR growth in listings during FY15-17E: The paid listings growth slowed to 16% during Q2FY16 on a YoY basis to 3.50lcs as against 2.96lcs during Q2FY15. We expect the paid listings growth for FY16E and FY17E at 19.4% and 23% respectively taking the aggregate listings base could reach to 4.14lcs and 5.11lcs.

Just Dial is now into a platform where people can transact or buy and sell, not just a destination for local information, Search plus service with more added listings from online shopping to book a table in restaurant, doctors appointment, travelling services, buy grocery online, ordering flowers, B2B service and on demand services like plumber, electrician, with user reviews and ratings. To promote Search plus, JD is planning to spend around Rs.1000 Mn for advertising campaign in FY16E. It has also added 1200 more employees in Q1FY16 for sales and marketing teams.

Cheque to be drawn in favour of: "Just Dial - Escrow - R (For Retail) and ASBA Application is mandatory for HNI Customer. Objects of the Issue: The objects of the Offer are to achieve the benefits of listing the Equity Shares on the Stock Exchanges and to carry out the sale of Equity Shares by the Selling Shareholders. The listing of the Equity Shares will enhance our brand name and provide liquidity to the existing shareholders. Business Overview: Just Dial Ltd. (JDL) is a leading local search...