Buy Just Dial; target of Rs 1475: Motilal Oswal

Motilal Oswal is bullish on Just Dial and has recommended buy rating on the stock with a target of Rs 1475 in its May 13, 2014 research report.

Motilal Oswal`s research report on Just Dial

"Just Dial (JUST) reported revenue of INR1.24b (est. of INR1.21b), marking a YoY growth of 26.4%, primarily driven by 27% growth in paid subscriber base (262,150 as of FY14 v/s 206,500 in FY13). EBITDA margin for 4QFY14 stood at 30.1% (est. 30.8%), against 27.8% in 4QFY13, a YoY increase of 230bp mainly due to operating leverage. PAT for 4QFY14 stood at INR342m (est. INR302m), marking a YoY growth of 60% driven by strong operational performance and lower than expected tax rate (which stood at 26% as the company avails indexation benefits on other income). Deferred revenues stood at INR1.62b in FY14 (128 days of revenues) vs INR1.35b in FY13 marking a YoY growth of 20.0% even as Evergreen contracts contributed 60% to revenues in FY14 as against 50% in FY13."

"JUST has more than 17 Search Plus services live on the platform. Company also launched real time reverse auction for branded goods, which will enable a user/buyer to discover the best price for any branded good/s on a real-time basis. Also, JUST launched JD Maps during the quarter by replacing Google Maps for directions on the Just Dial platform. Number of subscribers who have transacted for "Search Plus" services stood at ~140,000 in 4QFY14 vs ~85,000 in 3QFY14."

"We believe JUST will be able to grow at a faster pace in FY15, driven by price increases. While we have factored a one-time ad spend of INR600m in our estimates, we have not taken any benefits on revenue from Search Plus, thereby providing an upside risk to our FY16E estimates. The stock trades at 51x FY15E and 38x FY16E EPS respectively. We value JUST at 50x FY16E EPS of INR29.5. Maintain Buy with a target price of INR1,475," says Motilal Oswal research report. 

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