Moneycontrol Bureau
Shares of Just Dial were hammered out of shape by investors on cautious guidance by the management. The stock fell for second day (down 6 percent intraday) after its March quarter results. It has fallen 8 percent in last three trading days and lost 27 percent in a month's time. The local search engine posted 25.08 percent decline in net profit at Rs 35.33 crore for January-March quarter while total income from operations grew 14.92 percent to Rs 179.61 crore.
Investors continued to sell the stock after its management said, in a conference call, that its margins will suffer in short term as next few quarters will be in investment phase but will see long term growth. What also ticked off investors was Just Dial's rising employee expenses. The management said that employee expense is likely to be a tad higher in FY17 from earlier expectations.
However, the management expects over 20 percent revenue growth from FY18.
Analysts are also worried about the stock's performance and reduced target price on it. JD Omni has been a matter of concern for most analysts. Goldman Sachs has a sell rating on the stock with a target price of Rs 500 per share, worried about heavy strategic focus on JD Omni as core search growth is slipping. In an earlier report, the brokerage firm had warned of significant consensus downgrades in 2016 led by inadequate Search Plus (SP) and JD Omni traction. It had also pointed out that Just Dial will find it difficult to deliver 6 percent compounded quarterly growth rate (CQGR) in FY17 and to add 20000 paid campaigns every quarter to achieve its 20 percent revenue growth guidance for FY17.
Credit Suisse maintains neutral rating on the stock with a reduced rating of Rs 800 from Rs 950 per share. It has also cut earnings estimates by 19 percent and 8 percent in FY17 and FY18 respectively due to higher investments in core business. Earlier this month, the brokerage firm had downgraded the stock to neutral from outperform. Maintaining pace of paid listing growth, particularly outside the top-ten cities, and competition from vertical players are key challenges for Just Dial.
Bank of America Merill Lynch has reiterated underperfom rating with a revised target of Rs 660 from Rs 755 per share. It has also reduced FY 17-18 EBITDA by 6 percent and net income by 6-7 percent.
IDFC has neutral rating with a revised target price of Rs 650 from Rs 580 per share. It expects earnings to bottom-out in first half of FY17 and a reversal in H2FY17 based on the success of JD Omni.
At 12:23 hrs Just Dial was quoting at Rs 665.75, down Rs 36.50, or 5.20 percent on the BSE.Posted by Nasrin SultanaFollow @NasrinzStory
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