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Last Updated : Sep 27, 2016 08:27 PM IST | Source: Moneycontrol.com

Does Just Dial need to tweak its business strategy now?

UBS has also cut FY17/FY18/FY19 earnings per share (EPS) estimates by 15/17/15 percent as incorporating its disappointing Q1 results. It expects a structural shift in Just Dial‘s EBITDA margins as it grows further in the Tier 2-3 cities.

 
 
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UBS has downgraded Just Dial to sell and lowered target price to Rs 450 per share from Rs 710 with a cautious view that search business is deteriorating faster than expected.

According to its research, JustDial’s app downloads/ranking continues to decline while other more established vertical competitors have remained steady.

It further states that Just Dial’s heavy reliance on Google for web traffic (80 percent of its traffic) implies that app downloads/usage has become a critical source of direct traffic with ever changing web SEO (search engine optimisation) codes, which may push it to burn cash to improve its app download share.

UBS has also cut FY17/FY18/FY19 earnings per share (EPS) estimates by 15/17/15 percent as incorporating its disappointing Q1 results.  It expects a structural shift in Just Dial’s EBITDA margins as it grows further in the Tier 2-3 cities.


The brokerage firm believes Just Dial needs to take immediate steps to augment its branding and digital traffic. It suggest two possible strategic scenarios for Just Dial : launch an aggressive marketing campaign to gain consumer mindshare, web traffic and app downloads; or look for a strategic partner that can leverage Just Dial’s SME relationships, listings and sales force to cross-sell.

Shares of Just Dial fell 3 percent intraday on Tuesday. At 10:46 hrs Just Dial was quoting at Rs 442.00, down Rs 12.95, or 2.85 percent on the BSE.

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Data Infograph by Ritesh Presswala



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First Published on Sep 27, 2016 02:00 pm
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