At 03:15 pm, the stock was trading 3 per cent higher at Rs 638, as compared to a marginal 0.01 per cent rise in the S&P BSE Sensex. A combined 15.64 million equity shares, representing 24 per cent of total equity, of Just Dial have changed hands on the NSE and BSE so far.
Just Dial, India’s leading local search engine company, had completed buy-back of 2.75 million equity shares at a price of Rs 800 per share for an amount aggregating up to Rs 220 crore from shareholders on a proportionate basis, through the tender offer, on January 10, 2019.
The company had posted more than double net profit at Rs 57.3 crore in the October-December (Q3FY19) quarter. Operational revenue grew 15 per cent at Rs 227 crore over the previous year quarter. Ebitda (earnings before interest, taxation, depreciation and ammortisation) margin, excluding ESOP expenses, expanded 88 basis points at 26.7 per cent.
Just Dial expects FY20 reported Ebitda margin to stay in the 26-27 per cent band with advertising & promotion (A&P) spend at 7-8 per cent of revenues though there could be quarterly fluctuations.
“Just Dial exuded confidence in growing at mid-teen YoY in FY20 driven by both volumes and realization even though it conceded an inherent pressure on the pricing due to the growing share of tier2/3 cities. The confidence is coming from the rising unearned revenue (+33 per cent YoY in Q3FY19) that should reflect in improved growth over subsequent quarters”, analysts at JM Financial said in company update.
While operational stability plus steady cash-flow generation could attract investors’ interest at current valuations (18x FY20F EPS; 60 per cent discount to Info Edge), the uncertain longer-term outlook for Just Dial’s business model could limit the conversion.
Also, post the recently concluded buyback, we do not see any tactical triggers in the near term, the brokerage firm said in January 22, 2019 report.