Buy Just Dial, target Rs 650: Edelweiss Financial Services

Edelweiss has a buy call on Just Dial Ltd. with a target price of Rs 650. The current market price of Just Dial Ltd. is Rs 566.75 Time period given by the brokerage is a year when Just Dial Ltd. price can reach defined target. Just Dial Ltd., incorporated in 1993, is a midcap company with a market cap of Rs 3807.98 crore.

Investment rationale by Edelweiss
Our recent interaction with Just Dial’s (JD) management reinforces our confidence in the company’s bright prospects. Key takeaways are: 1) management is confident of improvement in revenue growth led by rising collections; 2) the company is mulling appointment of JD resellers to enhance penetration without adding feet-on-street; 3) operating leverage is envisaged to boost EBITDA margin, but FY19 advertising spends are likely to be higher than FY18; and 4) although focus is on monetising core search operations, management is investing in JD Omni & Search Plus with an eye on long-term growth. While we maintain our target multiple, we believe strong user engagement matrix will accelerate revenue growth and could warrant a rerating going ahead. We revise up FY19E and FY20E revenue/PAT 3.6%/6.1% and 5.5%/10.1%, respectively, to factor in stronger revenue growth. Maintain ‘BUY’ with revised target price of INR650 (INR590 earlier).