JustDial’s Q4 numbers were below estimates but we remain positive about the upsides from Search plus. Further new initiatives and services support our investment thesis. We see the following positives (a) Hyper-local fulfillment – Just Dial is planning to address the last mile delivery to the consumer by investing in hyperlocal logistics services. These services will be limited to a two km radius and will be hyper-local in nature, addressing instant gratification. We would view this as positive as we don’t see any meaningful competition in this space and are of the view that Just Dial with its local search sales organization structure is suitably placed (b)On demand- In addition to hyper-local fulfilment initiative, company plans to leverage its technology capabilities via offering of a new service “On Demand”. (c) Good initial traction on Search plus – Initial traction on online shopping has been robust with average ticket size at R17,000 (d) Further company sees additional revenues coming from the cloud based solution empowering small businesses to manage inventory and will be available to these businesses on a pay per month basis. (d) company is a bit delayed on its micro payment solution offerings however there will be a delay by a quarter.
We retain our buy rating and cut our fair value target price to Rs 1670 versus Rs 1700 earlier.
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