Expect EBITDA margin to fall going ahead: Just Dial

Just Dial's first quarter net profit grew by 30.84 percent quarter-on-quarter to Rs 28 crore. In the current quarter, the company saw tremendous growth in the mobile platform, which grew 150 percent from earlier year same quarter, Ramkumar Krishna Machari, CFO of Just Dial told CNBC-TV18 in an interview. "Also PC internet grew by about 31 percent and together mobile and PC makes about 66 percent of the total Just Dial traffic," he added.

According Machari local search engine's margins are normally high in the first quarter and then it falls. In the first quarter of FY13 Just Dial had 31 percent EBITDA margin and it ended up the year with about 28 percent. Therefore, in FY14 also he is expecting that 35 percent EBITDA margin should come down. "But it will definitely expand than what it was in FY13," he said. Below is the verbatim transcript of his interview to CNBC-TV18 Q: Let me start by asking you about the safety net that you had put for investors in the initial public offering (IPO) now that that is not required has that entire amount being released? A: The safety net almost 95 percent of the retail investors have sold out from the IPO. The way it works as per the agreement almost 80 percent was released right now of that money but 15 percent we are required to keep it till the IPO, six months mandatory period of the safety net is over. Q: For the current quarter if you could just start by detailing what kind of growth you saw in the internet and mobile internet part of the business and what proportion it is contributing to overall business today? A: If one really look at our revenue it is platform agnostic. We sell Just Dial as a platform. Our growth in terms of search volume, we have seen tremendous growth in the mobile platform. For the current quarter if one really looks at mobile, it grew 150 percent from earlier year same quarter. PC internet grew by about 31 percent and together they make about 66 percent of the total platform Just Dial traffic. This is in line with our expectation. We have always believed the way things are moving in India in terms of internet evolution and the way the internet adoptivity is moving to mobile, the trends are in the right direction. Q: You have actually expanded your margins quite a bit this quarter because of employee cost going down can you hold it around these levels of nearly 35 percent? A: Our margins are normally high in the first quarter. Yes, we have seen operating leverage on margin expansion happening across. Particularly the factors driving it are the increasing proportion of search happening through the internet, increasing sales productivity and the high fixed cost. The increase in sales we are seeing the margin expansion happening. Last quarter in the same period in FY13 we had 31 percent EBITDA margin and we ended up the year with about 28 percent, reason being that some of the marketing and advertising spend happen in Q2 & Q3. So, the 35 percent should come down but it will definitely expand than what it was in FY13.