In an interview with CNBC-TV18, Ramkumar Krishnamachari, CFO of Just Dial said that the company has taken steps to address growth on core search which has started yielding results.
Goldman Sachs estimates Just Dial's two-year revenue and earnings per share (EPS) CAGR of 16 percent and 5 percent respectively. It adds that the company will find it difficult to deliver 6 percent compounded quarterly growth rate (CQGR) in FY17.
Credit Suisse feels that maintaining pace of paid listing growth, particularly outside the top-ten cities, and competition from vertical players and others are challenges for Just Dial.
With USD 140 million of cash (30 percent of market cap), Goldman sees valuation support for the stock.
Operating profit (earnings before interest, tax, depreciation and amortisation) may decline 8.2 percent year-on-year to Rs 46 crore and margin may shrink 706 basis points to 25.34 percent in quarter gone by but margin may expand on sequential basis.
Goldman Sachs is worried about Search Plus execution risks and expects core search revenue growth to decelerate over FY15-FY18 to 19 percent due to inadequate investments in the past and rising competition.
"The company has launched its latest Android app on Google Play Store for users. The company has also submitted its new iOS app to Apple App Store and is expected to go live shortly," the company said in a filing to the BSE.
The company's net profit rose 18 percent to Rs 33.17 crore on 21.42 percent rise in total income to Rs 175.74 crore in Q1 June 2015 over Q1 June 2014.
The emergence of various vertical-specific competitors in restaurants, travel, movie ticketing, will impact Just Dial's core offerings, feels Barclays
Private equity Tiger Global has offloaded 2.1 percent stake in the company yesterday at Rs 1088 per share. Tiger Global was a pre-IPO investor and held 11.28 percent stake as on March 31
In downside scenario, the valuation of the stock could be Rs 900 and even if Search Plus is a bigger success than upside scenario implies valuation of only Rs 1500, feels the brokerage.
The company plans to start a mega campaign to popularize the Search Plus business, which enables customers to carry out transactions such as booking movie tickets, ordering flowers or making doctor appointments from its directory, as well as buy various products, CFO Ramkumar Krishnamachari told CNBC-TV18.
The company‘s cost to download apps on mobile internet has escalated 3-4 times in the last year itself. Ramkumar Krishnamachari, CFO, Just Dial is confident of app downloads to see a sharp rise via aggressive marketing spends.