25 February 2016
Update | Sector: Technology
Just Dial
Buy
BSE SENSEX
22,976
S&P CNX
6,971
CMP: INR537
TP: INR830 (+55%)
JD Omni and improved Search Plus launched; sets stage for next leg of
growth
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, (INR m)
Free float (%)
JUST IN
70.5
37.9/ 0.6
1,455/378
-26/-22/-39
699
67.4
We attended the launch of JD Omni and improved Search Plus, key
highlights of which were as follows:
Financials & Valuation (INR b)
Y/E Mar
2016E 2017E 2018E
Sales
7.0
8.5
10.5
EBITDA
1.7
1.5
2.4
NP
1.3
1.2
1.8
EPS (INR)
19.3
16.7
25.9
EPS Gr. (%)
-1.8 -13.9
55.2
BV/Sh (INR)
90.3 104.7 127.6
RoE (%)
20.7
17.1
22.3
JD Omni to be high margin business
RoCE (%)
28.3
24.4
31.8
Management commented that costs for
P/E (x)
27.8
32.2
20.8
frontloaded (~INR120-150m incurred in
P/BV (x)
5.9
5.1
4.2
JD Omni takes hyper local to the next level, makes every SME an e-tailer
JUST unveiled the new JD Omni app, which is a digital business manager by
providing vendors with their own ecommerce portal, app, dashboard with financial
parameters (along with a monthly comparison), inventory management system
along with payment integration, making it the complete enterprise solutions. In a
nutshell, it helps traders come online with their businesses and sell directly to
consumers, apart from assisting in supply chain management. Pricing of the first
version is INR20,000 as setup cost and a monthly fee of INR2,000. Close to 1,500
SMEs have already signed for the same, including 500 opting for the upfront fee
model. Upfront fee is ~INR120,000, however the introductory fees for the 500
opting for it was INR65,000. The ones opting for upfront free model get access to
only the first version and AMC for five years. JD Omni will cater to both segments –
retail and services, as well as B2B and not just B2C. At the vendor end, the app
interface is similar to Search Plus version.
JD Omni and Search Plus has been
9mFY16), hence gross margins are
expected to be high. Subsequently, JUST will incur sales related cost like cost of
hosting website, app, marketing and employee cost. As per management, EBITDA
margins are expected to be 70-75%. It is also planning to hire 500 dedicated feet on
street sales personnel and 500 tele marketing personnel by March 2016, especially
for JD Omni. JD Omni and Search Plus will be synergistic with the existing Search
business by transacting and managing vendors’ inventory and logistics, and
providing them with a domain.
Search Plus upgrade launched
JUST also upgraded the version of Search Plus which saw addition of key features in
the form of search through voice commands, cab bookings through Uber, Ola, and
Easy Cabs integrated into Just Dial, IRCTC feature for booking of train tickets, and
added scheduling for repairs services. While booking for Ola is back ended into JD
app itself, Uber interface is integrated to the Uber app. It has also enhanced hyper
local search features with price comparison of local and leading ecommerce
portals, apart from UI/UX improvement. It will be launching voice commands for
Indian languages also soon. The app also now has its own inbuilt maps in one single
app. Management highlighted that it is generating revenue from unique product
categories that don’t have vertical apps. It will be soon introducing one tap pay
option through PayUMoney soon, without a need of wallet, through connected
cards and introducing JD hyper local logistics, in top cities of India. Management
highlighted that evangelists campaign with 1000 personnel pan India will begin
soon.
Estimate change
TP change
Rating change
Niket Shah
(Niket.Shah@MotilalOswal.com); +91 22 3982 5426
Chintan Modi
(Chintan.Modi@MotilalOswal.com); +912239825422/Kaustubh
Kale
(Kaustubh.Kale@MotilalOswal.com); +912230102498
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.