We continue to believe that Justdial is the most cost-effective SME advertising platform relative to peers. While competition remains in the premium paid listings space from Google and horizontal players, we find there is still wide scope for expanding coverage at the mid- to low-end of the pyramid and in Tier 2/3 cities, areas which we believe provide JUST with a decent runway for growth.
The stock currently trades at ~16.7x FY21F EPS (of Rs 38) and has cash of ~Rs 226 per share (~28% of market cap). We maintain our TP of Rs 765, which is based on 20x FY21F operating EPS of Rs 26.3 + FY20F cash of Rs 241/share. We reaffirm our Buy recommendation.
Q1FY20 results highlights
o Q1 revenue was up ~9.7% y-o-y to Rs 2.42 bn, 1.5% below our estimates. This was due to weaker realisations, and below estimate paid listings addition.
o Paid listings grew 2.6% q-o-q (12.3% y-o-y) to 528.9k, vs our expectation of 3.1% q-o-q. Paid listings missed on (i) weakness in SME business environment and (ii) cut in JDA to focus on productivity.
Average realisations were down 1.7% q-o-q (and -3% y-o-y) to ~Rs 18.6k, vs our forecast of -0.5% q-o-q at `18.8k. The miss on realisation was due to pricing discounts in Tier-1 to drive volumes.
Overall listings grew 4.2% q-o-q to 27.6 mn vs our estimate of 27.03 mn.
Adjusted Ebitda margins were 29% vs our estimate of 27.5% largely driven by lower other expenses at 16% of revenues vs our estimate of 18%. This could have been due to weaker ad spending.
Reported PAT of Rs 769 mn vs our estimate of Rs 550 mn was led by higher other income and lower other expenses.
Unique visitors were up ~23% y-o-y to 161.2 mn, of which ~81% came through mobile interface, ~14% through desktop PC and ~5% through voice.
Cash & cash equivalents were~Rs 14.7 bn (~Rs 226 per share). Unbilled revenues grew by only 1.5% y-o-y due to provision of monthly payment plan.
