Just Dial soars 7.5% as brokerages turn bullish

Shares of local search engine provider Just Dial soared 7.5 per cent on Wednesday on bullish outlook presented by broking houses. Foreign brokerage Citi has raised its price target on the stock to Rs 1,370, while domestic broking house Edelweiss has set an aggressive target of Rs 1,630. Shares of the company on Wednesday ended at Rs 1,266.The company, armed with 14.1mn listings, has built a strong case for entry in the booming e-commerce market via the transaction model, lending a significant option value to investors at negligible cost," said Sandip Agarwal, analyst at Edelweiss in a recent report.

Edelweiss expects compounded annual growth in revenue and earnings for the company will be around 30 per cent each between FY14 and FY17. The brokerage says it is valuing Just Dial at 45 times its estimated earnings for FY17. This, Edelweiss states, is 45 per cent discount to Yelp, a NYSE-listed company that provides information on local businesses.

Just Dial underperformed the benchmark indices as its stock is down more than 8 per cent so far in 2015. However, the stock has more than doubled since its IPO in June 2013.