MOSL: JUST DIAL (Downgrading to Neutral)-Investing to grow the core business
​Just Dial: Investing to grow the core business; Downgrading to Neutral
(JUST IN, Mkt Cap USD0.5b, CMP INR494, TP INR465, 6% Downside, Downgrade to Neutral)
- PAT takes a hit as other income declines: JUST's 4QFY17 revenue grew 5.9% YoY to INR1,817m (est. of INR1,931m). EBITDA declined 10% YoY to INR322m (est. of INR292m), with the margin contracting 310bp to 17.7% (est. of 15.1%) on account of higher employee expenses (+230bp) and other expenses (+80bp as % of sales). Other income declined by 53% YoY to INR126m, and thus PAT by 37% YoY to INR254m (est. of INR244m) in 4QFY17. For FY17, revenue grew 7.6%, EBITDA margin shrunk 630bp to 15.3% and adj. PAT declined 15% to INR1,214m.
- Margins to remain under pressure: For reviving growth in the listing business and growing the Search Plus business, the company has earmarked ad spend of ~INR1b. The company spent INR110m toward ad & promotion, with core ads of INR75m during the quarter. The company also intends to increase feet on street. Total no. of feet stands at 3,500 (incl. 2,000 JD Ambassadors). Management highlighted that due to these efforts and the launch of JD Lite, total traffic rose 22% YoY in 4QFY17, with app downloads increasing 46% on android platform and 23% on iPhone.
Just Dial is a local search engine company based in India. Co. is engaged in providing local search, related information and transaction services through is operating platform, www.justdail.com. Co. provides users of its Just Dial search service with information and user reviews from Co.'s database of local businesses, products and services across India. Co.'s search service is available to users across multiple platforms, such as the internet, mobile Internet, over the telephone (voice) and text (SMS). Co. also has offices across India in Ahmedabad, Bengaluru, Chandigarh, Chennai, Coimbatore, Delhi, Hyderabad, Jaipur, Kolkata and Pune.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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