Just Dial Stock May Give High Retuirn: Are you looking for a stock that can double or triple your money? If yes, then keep an eye on the share of local search engine Just Dial. Brokerage house Ventura Research is quite bullish regarding this stock. According to the brokerage house, in a normal case, Just Dial shares have the potential to give 190 percent returns in a time period of 2 years. Currently the share price is around Rs 1000, while the brokerage has set a target price of Rs 2920 for it in 2 years. According to Ventura, it could be even higher in a bull case.
Has seen significant decline from all time high
By the way, the stock of Just Dial is currently trading around Rs 1008. But it is trading at a significant discount from its all-time high. The share touched an all-time high of Rs 1895 on August 5, 2014. That means right now it is trading at a discount of about 47 percent from its peak. However, this year i.e. in the year 2024, the stock has increased by 25 percent. At present, the fundamentals of the stock appear to be strong and the brokerage house is seeing scope for high growth in it. The all-time low of the share is Rs 251 which was made on 26 March 2020.
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Viewpoint of brokerage house Ventura Research
Brokerage house Ventura says that Just Dial Limited is a unique listing services provider of its kind in the Indian market, which competes with platforms like Google and Bing. Just Dial Xperts faces competition from The Urban Company, while India Intermesh is a major rival in JD Mart’s B2B platform. All these businesses have strong tailwinds with low penetration and competitive intensity, hence double digit growth can easily be achieved in the mid-term.
• Focusing on Tier-II and Tier-III cities, Ventura expects revenues to grow at a CAGR of 16.2% to Rs 1,635 crore due to:
– Rs 1459 crore with 12.3%/44.9% CAGR growth in listing vertical
– Rs 176 crore with 44.9% CAGR growth in transaction vertical
• With operating leverage (due to increasing automation) the brokerage expects Gross Profit, EBITDA and Net Earnings to grow to Rs 808 crore, EBITDA and Net Earnings by FY27E with CAGR growth of 35.7%, 42.8% and 24.8% respectively .
• Due to these reasons, there is a possibility of growth in margins, due to which EBITDA is expected to reach 38.6% (+1,783bps) and net margin is expected to increase to 43.1% (+831bps). There is a possibility of growth in return ratios RoE and RoCE, with RoE reaching 12.4% (+342bps) and RoCE reaching 7.4% (+407bps).
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Risk to brokerage estimates
(i) Slower than expected revenue growth from listing services given competition
(ii) Just Dial Xperts are not generating traction on expected lines
Plus points of Just Dial
(i) Market leadership in the local search engine industry in India, enabling SMEs to widen their visibility.
(ii) Gradual diversification from its core listing business into areas such as on-demand services.
(iii) Continuous improvement in key performance indicators that reflect financial strength and stability.
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In bull and bear case
• Bull Case: The company’s revenue is expected to grow at a CAGR of 18% for FY24-FY27E and margins are expected to expand by about 947 bps to 44.3% for FY24-FY27E.
• Bear Case: The company’s revenue is expected to grow at a CAGR of 15% for FY24-FY27E and margins are expected to expand by about 768 bps to 40.2% for FY24-FY27E.
(Disclaimer: The view or advice on the share is given by the brokerage house. These are not the personal views of Financial Express. There are risks in the market, so take expert opinion before investing.)
