Facebook Pixel Code

Positive on Just Dial, target Rs 1,985: Nomura

We reiterate our top pick rating on Just Dial and maintain a positive stance with a buy rating.

Positive on Just Dial, target Rs 1,985: Nomura

We reiterate our top pick rating on Just Dial and maintain a positive stance with a buy rating. We raise our target price to Rs 1,985 (earlier Rs 1,920) on roll-forward to September 2016 and continues to be based on sum-of-the-parts (SoTP) methodology ? local search business at an exit multiple of 30x FY19f core earnings of $78 million discounted back to September 2016, to arrive at a valuation of ~Rs 1,490 per share. Marketplace business at a multiple of 1x FY19f GMV discounted back to a year from now, to arrive at a valuation of ~Rs 495 per share. Our target implies P/Es of ~65x for FY16f (EPS: Rs 30.6) and 46x for FY17f (EPS: Rs 42.5), which are in line with its historical range (1-year average forward P/E of 55x since mid-2013).

Following our meeting with Justdial CFO, we reiterate our positive stance on the stock on strong traction in its local search business (27% CAGR over FY14-19f on our estimates), driven by its leadership position and synergies from expansion into Search Plus services. Its marketplace business is a play on India?s e-tailing growth story (which in our estimates is likely to grow 11x over the next five years). Overall, we forecast a revenue CAGR of 31% and an EPS CAGR of 37% over FY14-17f.

Justdial has 20 Search Plus services live on its website, and within the next one to one-and-a-half months, all these services should be live on mobile as well. The management believes it is possible to increase paid listing penetration in its local search business to 4-4.5% (versus 2% of overall listings being paid in Q1FY15) over the next 3-5 years.

Nomura

Get live Share Market updates, Stock Market Quotes, and the latest India News and business news on Financial Express. Download the Financial Express App for the latest finance news.

First published on: 16-09-2014 at 00:42 IST
Market Data
Market Data
Today’s Most Popular Stories ×