JM Financial recommended hold rating on Just Dial with a target price of Rs 540 in its research report dated May 22, 2018.
JM Financial's research report on Just Dial
Just Dial (JD) reported 4QFY18 revenues in-line with our estimates. However, EBITDA was below estimates due to a strong sales headcount addition even as a rationalisation of other costs, including advertising and promotion (A&P), continued. JD has expanded the cold-calling sales team by 23% over the last two quarters to drive penetration in tier 2/3 cities.
Thus, we maintain our soft revenue growth outlook though the management is hopeful of acceleration in FY19; flow-through of the 4QFY18 cost structure drives 2%/3% cut in our FY19/FY20 EPS estimates. While our structural concerns appear priced in the stock’s 19% YTD U/P, we see no reasons to revisit our caution. Maintain HOLD.
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