14 December 2015
Update | Sector:
Technology
BSE SENSEX
25,150
S&P CNX
7,650
CMP: INR892
TP: INR1,015 (+14%)
Just Dial
Buy
Base business growth recovery likely from FY17
We met Just Dial’s (JUST) Managing Director Mr. Mani to get updates on the base
business, Search Plus and the launches planned.
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
JUST IN
69.4
61.9/0.9
1,632 / 741
15/-14/-24
626
67.4
Financials & Valuation (INR billion)
Y/E Mar
Sales
EBITDA
NP
EPS (INR)
Gr. (%)
BV/Sh(INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
2015
5.9
1.7
1.4
19.7
14.6
95.5
23.0
31.5
45.5
9.4
2016E 2017E
7.1
1.7
1.4
19.6
-0.3
90.6
20.9
28.7
45.6
9.9
8.6
1.9
1.4
20.3
3.4
108.6
20.4
29.1
44.1
8.3
Base business to pick up in FY17, led by renewed sales focus
Management highlighted that efforts are underway to aggressively grow the base
business, which suffered due to excessive focus on Search Plus application
launch. Management believes recruitment of sales force to drive business listings
was slow in the last two years; given the scale of business, the number of
employees should have been double than what it currently is. The company has
started recruiting sales personnel on a war footing and has plans to launch ad
campaigns for Search Plus beginning January 2016, which we believe will also
lead to brand building of Just Dial. We believe base business will see pressure till
end-FY16, and start showing meaningful recovery in FY17with increase in paid
listings on the back of aggressive selling, rationalized prices and ad campaigns-led
awareness. Management expects base business paid listings to grow 20% in FY17.
Price rationalizations to augur well for volume growth in paid listings
Management commented that JUST has revamped its listing and pricing policy to
make it more granular—selling the top 7 positions for each pin code (as against
top 3 positions earlier with an area-level threshold in terms of price).
Management believes the move will rationalize prices and augur well for volume
growth owing to increased vendor participation.
‘JD Omni’ a strong offering helping vendors run stores online and real-time
JUST plans to launch a cloud-based OMNI service (access through mobile phone,
tablet, PC, etc.) for SMEs; it will work on a pay per month basis. A listing on JD
platform entitles the vendors to sign up for the service and select store category,
which will allow them to operate stores online. Categories are designed in such a
way that there are pre-populated parameters online. For example, in case the
vendor deals in automobile tyres, he will have inventory options like CEAT, MRF
and Goodyear already populated. After providing the initial date through a
spreadsheet of relevant inventory kept at store, the data will be migrated online
in JD Omni, post which the vendor can manage inventory and fulfill orders (both
online and offline) on a real-time basis even when not in office—this would also
entail opening a .com domain for the seller, which will help the vendor as well as
the consumer to track orders. Earlier, vendors faced a problem of tracking
inventory to fulfill orders; the problem should reduce with the launch of JD Omni,
resulting in smoother transactions with Search Plus. The channel is expected to
go live in January 2016. The company plans to increase awareness through an
evangelist campaign, which will provide demos for the product.
Estimate change
TP change
Rating change
-8%
-8%
Niket Shah
(Niket.Shah@MotilalOswal.com); +91 22 3982 5426
Chintan Modi
(Chintan.Modi@MotilalOswal.com); +9122 39825422/Kaustubh
Kale
(Kaustubh.Kale@MotilalOswal.co); +9122 30102498
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.