Why Does Citi Remain Constructive on Just Dial Despite Growth Moderation?
Just Dial Business Overview
Just Dial operates one of India’s largest local search and discovery platforms, connecting consumers with small and medium businesses across categories such as services, retail, and local commerce. Over the years, the company has transitioned from a traditional listings model toward a more digital, app-driven engagement platform with increasing focus on monetisation efficiency.
Citi has maintained its Buy rating on Just Dial while revising the target price to ₹1,000 from earlier levels. The brokerage’s stance reflects confidence in the company’s profitability trajectory, even as near-term growth assumptions are moderated.
Key Highlights From Citi’s Note
🔹 Revenue growth at 6.4 percent year-on-year was largely in line with expectations.
🔹 EBITDA margins beat estimates due to continued operating expense rationalisation.
🔹 EBITDA grew 10 percent year-on-year despite modest topline expansion.
🔹 Overall employee headcount declined 1 percent quarter-on-quarter.
Citi notes that Just Dial’s ability to grow EBITDA faster than revenue underscores the benefits of operating leverage, particularly in a business model where fixed costs dominate the expense base.
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3D SWOT — Strengths and Weaknesses
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🔹 Strong brand recognition 🔹 Asset-light digital platform 🔹 Improving cost discipline |
🔹 Slower traffic growth 🔹 Dependence on SME advertising 🔹 Competitive digital landscape |
While topline growth has moderated, Citi believes the platform retains pricing power and monetisation flexibility as it recalibrates its growth strategy.
3D SWOT — Opportunities and Threats
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🔹 Higher monetisation per user 🔹 Cross-sell opportunities 🔹 Operating leverage benefits |
🔹 Traffic decline risk 🔹 Aggressive competition 🔹 Need for reinvestment |
Citi cautions that Just Dial may need to step up investments in sales, product development, and traffic acquisition to reignite growth, which could moderate margins in the near term.
Valuation and Investment View
Citi has lowered growth estimates and reduced the valuation multiple to 10x from 12x earlier, factoring in continued traffic softness. Even after this adjustment, the brokerage sees meaningful upside driven by EBITDA expansion and operating efficiency.
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Investor Takeaway
Derivative Pro & Nifty Expert Gulshan Khera, CFP®, observes that Just Dial remains a profitability-led story where operating leverage can compensate for slower revenue growth. Investors should closely track reinvestment intensity and traffic trends as key determinants of medium-term returns.
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Related Queries on Just Dial and Internet Stocks
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
