Dialling right numbers: Just Dial zooms 70% in 13 sessions; should you buy?

Just Dial shares zoomed 71 per cent in the past 13 trading session to close at Rs 759.41 on March 4. Market experts are bullish on Just Dial shares in the present market scenario.

Just Dial shares post q1 results
Just Dial Q1 results: The local search engine's net profit for the first quarter ended June 30, 2016 rose 7.98 per cent to Rs 38.93 crore as against Rs 36.05 crore in the corresponding quarter a year ago.

Dialling right numbers, local search engine provider Just Dial shares zoomed 71 per cent in the past 13 trading session to close at Rs 759.41 on March 4. The scrip has gained 41 per cent since the Union Budget 2016. Just Dial was trading at Rs 536.85 on February 29. Market experts are bullish on Just Dial shares in the present market scenario.

The company recently went for a buyback offer from February 25, and the last day to tender shares is March 10. The company plans to buy back close to 10.61 lakh shares. Shares of Just Dial rallied 41 per cent since its buyback offer began.

Of late, Just Dial unveiled the new JD Omni app, which is a digital business manager by providing vendors with their own ecommerce portal, app, dashboard with financial parameters (along with a monthly comparison), inventory management system along with payment integration, making it the complete enterprise solutions. In a nutshell, it helps traders come online with their businesses and sell directly to consumers, apart from assisting in supply chain management.

Pricing of the first version is Rs 20,000 as setup cost and a monthly fee of Rs 2,000. According to Motilal Oswal, close to 1,500 SMEs have already signed for the same, including 500 opting for the upfront fee model.

Upfront fee is Rs 120,000, however the introductory fees for the 500 opting for it was Rs 65,000. The ones opting for upfront free model get access to only the first version and AMC for five years. JD Omni will cater to both segments – retail and services, as well as B2B and not just B2C. At the vendor end, the app interface is similar to Search Plus version.

As per Just Dial management, EBITDA margins are expected to be 70-75 per cent. It is also planning to hire 500 dedicated feet on street sales personnel and 500 tele-marketing personnel by March 2016, especially for JD Omni. JD Omni and Search Plus will be synergistic with the existing Search business by transacting and managing vendors’ inventory and logistics, and providing them with a domain.

During October-December 2015, the company posted net profit of Rs 26.99 crore, down 16.02 per cent, against Rs 32.14 crore in the corresponding quarter a year ago.

For the financial year ended March 2015, the company reported net profit of Rs 138.89 crore, up 15.16 per cent against Rs 120.61 crore last year. Gross sales of the company grew 27.86 per cent on year-on-year basis.

Motilal Oswal in a research report said, “We expect 21 per cent revenue CAGR and 9 per cent profit CAGR over FY15-18. We believe, its recent launch of JD Omni and Search Plus will provide new avenues of growth for coming years. However, the evangelists and ad campaigns shall prove to be the key to success of both JD Omni and Search Plus.” The brokerage house maintained ‘Buy’ rating on the stock with target price of Rs 830.

Japanese brokerage house Nomura also have ‘Buy’ rating on Just Dial shares with target price of Rs 970. The brokerge house in a research note said, “Our target price is around 25 per cent higher than consensus on expectation of recovery in the core search business and traction in the marketplace model and JD Omni.”

Nomura thinks India’s ecommerce industry has the potential to grow nearly 4 times by 2019, led primarily by increasing internet penetration (driven by smartphones), under-penetration of digital media, the large untapped market and improving macroeconomic fundamentals.

On March 8, Just Dial shares were trading nearly 5 per cent down at Rs 722.55 (at 9.25 am).

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 04-03-2016 at 16:55 IST