Just Dial Shares Surge As Analysts Bet On Aggressive Growth Plans With RIL’s Backing
Kotak Institutional Equities upgraded the stock to 'buy'. Yes Securities, however, suggests 'reduce' on Just Dial.
Shares of Just Dial Ltd. jumped as much as 15% as analysts bet on the search and listings platform’s growth initiatives with the backing of Reliance Industries Ltd.
Just Dial is looking to transform its platform into a comprehensive discovery and transactions platform, Kotak Institutional Equities said in a note. “Reliance Retail may take some more time to fine-tune Just Dial’s next steps and medium-term strategy and hence near-term financial performance may remain sub-par.”
The platform, the brokerage said, is looking to add a transaction layer to the business on top of search and discovery services that it already offers. Also, its JDXpert is being tested with pest control category pilot.
Kotak upgraded the stock to ‘buy’ but trimmed its fair value to Rs 970 apiece from Rs 1,110. That, it said, is to account for a weaker-than-expected quarter in which Just Dial posted a year-on-year revenue decline of 6.9%, driven by lower-than-expected paid campaigns and muted realizations.
UBS, too, sees Just Dial benefiting from Reliance’s resources and expertise in building scale and logistics capability.
The platform, the Swiss investment banking company said, is planning to utilise large cash reserves for advertising and promoting its new third-party marketplace which will focus on three segments—JDMart (business-to-business e-commerce), JDXpert (services at home) and business-to-consumer e-commerce.
“JDMart is gaining traction steadily and the JDXpert pilot has already begun in metro cities. Also, a B2C e-commerce pilot is likely to start next month. We think the market is ignoring Just Dial’s potential to gain share in the B2B segment and other new opportunities with the backing of Reliance,” UBS said.
In July last year, RIL said its retail unit, Reliance Retail Ventures Ltd., will buy a 66.95% stake in Just Dial through preferential share allotment, open offer and secondary purchase from promoter for Rs 5,719 crore.
Yes Securities, however, suggests ‘reduce’ on Just Dial. “The B2C segment continues to show muted recovery from second Covid-19 wave, while B2B segment is still in nascent phase. The broad strategic plan after its acquisition by Reliance Retail is still awaited,” it said in a Jan. 19 note.
Citi Research cited its slower-than-anticipated progress on new initiatives such as JDMart. The research house cut it target price to Rs 825 from Rs 870, saying it would wait for JDMart’s monetisation and the launch of JDXperts before incorporating these into its estimates.
“The acquisition by Reliance, healthy cash position foray into B2B and B2C transactions are potential positives, although we await more clarity on traction in the latter initiatives,” Citi said in a Jan. 19 note.
Shares of the company jumped as much as 15.3%, the most since Dec. 9, to an intraday high of Rs 939.9 apiece. The scrip ended at Rs 924.4, 13.4% higher. Of the 14 analysts tracking the company, nine recommend a ‘buy’, one suggests a ‘hold’ and four have a ‘sell’ call, according to Bloomberg data. The average of 12-month price targets implies an upside of 10.9%.