Shares of Reliance-owned Just Dial have remained muted in the past six months.
Just Dial’s share price has moderated around 2% in the past six months.
Ventura Securities has initiated coverage on Justdial with a “buy” rating, assigning a target price of ₹2,920 (£27.28) for the stock over the next 24 months.
The target indicates an over 190% upside from the stock’s current market price of around ₹1,000.
The brokerage firm’s bull case target price for the stock is ₹3,378 and the bear case target price is ₹2,689.
Justdial’s secret sauce?
Justdial, one of India’s largest local search engines, is uniquely positioned in a competitive landscape that includes global platforms like Google and Bing, as well as local players such as The Urban Company and India Intermesh.
Despite the competition, Ventura notes that Justdial’s businesses—including JD Xperts (on-demand services), JD Mart (B2B platform), and its core listing services—are benefiting from strong tailwinds.
With low penetration and relatively low competitive intensity in these areas, Ventura expects the company to achieve double-digit growth over the medium term.
Justdial’s business model generates revenue from listing fees, subscription packages, JD Xperts, and JD Mart.
While the company’s core listing business remains dominant, contributing approximately 97% of total revenue in FY24, Justdial is gradually diversifying into other avenues, such as on-demand services, B2B marketplaces, and cloud-hosted business solutions.
The company’s market leadership in India’s local search engine industry gives it an edge in helping small and medium enterprises (SMEs) gain visibility and expand their digital presence across the country, the brokerage highlighted.
With a presence in over 11,000 pin codes and more than 250 cities, Justdial connects businesses nationwide, facilitating digital growth for traditional offline businesses.
Justdial’s strong operational metrics
Ventura highlights Justdial’s improving operational metrics as a key indicator of financial strength.
The company’s active listings have grown by 40% over the past three years, reaching approximately 4.4 crore in FY24.
Additionally, its average unique quarterly visitors have increased by 39%, from 12.3 crore in FY21 to 17 crore in FY24, reflecting the platform’s growing user engagement.
Furthermore, the company’s total ratings and reviews have risen by 25%, from 12 crore in FY21 to 15 crore in FY24.
Revenue and growth projections
Ventura projects Justdial’s revenues to grow at a compound annual growth rate (CAGR) of 16.2% to reach ₹1,635 crore by FY27. This growth will be driven by:
- A 12.3% CAGR in the Listings vertical, contributing ₹1,459 crore.
- A 44.9% CAGR in the Transactions vertical, contributing ₹176 crore.
Profitability and Margins
With increasing automation, Ventura expects Justdial to experience operating leverage, leading to significant growth in gross profits, EBITDA, and net earnings. The brokerage projects the following CAGRs:
- Gross Profits: 35.7% to ₹808 crore by FY27.
- EBITDA: 42.8% to ₹631 crore by FY27.
- Net Earnings: 24.8% to ₹705 crore by FY27.
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