Just Dial Ltd (JUSDIA)

CMP: | 1039 Target: | 1250 (20%) Target Period: 12 months BUY

July 20, 2021

Change of hands, digital trend key positive…

About the stock: Just Dial (JDL) generates revenues from advertisers
on various subscription and fee-based packages.

Company Update
 Reliance Retail Ventures Ltd will acquire 40.95% stake in JDL Particulars
 JDL’s launch of B2B platform will be a key revenue driver in the long run Particular Amount
Market Cap (| Crore) 8,627.6
Total Debt (| Crore) -
Cash and Invests (| Crore) 1,572.8
Q1FY22 Results: JDL reported Q1FY22 results. EV (| Crore) 7,054.8
 Revenues declined 5.8% QoQ due to impact of Covid 52 week H/L 1138/333
Equity capital 61.9
 Loss at EBITDA level of | 17.2 crore due to higher ad expenses Face value 10.0
 Just Dial made a loss at PAT level of | 3.52 crore
Shareholding pattern
Sep-20 Dec-20 Mar-21 Jun-21
What should investors do? JDL’s share price has grown by ~2x over the past five Promoters 34 36 36 35
years (from ~| 553 in Jul 2016 to ~| 1039 levels in Jul 2021). FII 34 33 32 29
DII 17 20 15 14
 We continue to remain positive and retain our BUY rating on the stock Others 15 12 17 22
Target Price and Valuation: We value JDL at | 1250 i.e. 26x P/E on FY23E EPS

ICICI Securities – Retail Equity Research

Price Chart

2,000
Key triggers for future price performance: 19,000
17,000 1,500
15,000
 Covid and changing consumer behaviour have led to increase in 13,000 1,000
virtualisation of business. Enterprises now have an omni channel presence 11,000
9,000 500
(in physical & digital world) 7,000
5,000 0
 JDL will be a key beneficiary of this shift of advertising to digital medium
Sep-18

Sep-19

Sep-20
Dec-19

Dec-20
Dec-18
Jun-18

Jun-19

Jun-21
Jun-20
Mar-19

Mar-21
Mar-20
and underpenetrated MSME (B2B) segment. The paid subscribers as a
percentage of total MSME is just 1.3% Nifty (L.H.S) Price (R.H.S)
 JDL’s B2B and B2C platforms are well placed to capture this demand leading
to PAT & revenue CAGR of 22% & 36%, respectively, over FY21-23E
Recent Event & Key risks Key F
 Change in promoters could help drive growth higher  Reliance Retail to acquire JDL

 Key Risk: (i) Inability scale up B2B

business, (ii) Inability to improve
Alternate Stock Idea: Apart from JDL, in our IT coverage we also like Affle. margins
 Key beneficiary of digital advertising spend
Research Analyst Key F

 BUY with target price of | 6,225 Devang Bhatt

devang.bhatt@icicisecurities.com

Key Financial Summary

5 year CAGR 2 year CAGR
Key Financials FY19 FY20 FY21 FY22E FY23E
(FY16-21) (FY21-23E)

Net Sales 892 953 675 0.2% 773 997 21.5%

EBITDA 229 273 155 1.4% 124 279 34.3%
EBITDA Margins (%) 25.7 28.6 22.9 16.0 28.0
Net Profit 207 272 214 8.4% 219 396 35.9%
EPS (|) 31.9 42.0 33.0 26.4 47.6
P/E 32.5 24.7 31.4 39.3 21.8
RoNW (%) 20.7 21.1 16.9 6.2 10.6

s
RoCE (%) 27.4 25.7 19.0 7.5 13.2
Source: Company, ICICI Direct Research
 Company Update | Just Dial Ltd ICICI Direct Research

Key highlight
Reliance Retail Ventures Ltd (RVL) has announced acquisition of controlling stake in
Just Dial Ltd for a total consideration of | 3,497 crore. Reliance VL will hold 40.95%
stake in the company and make an open offer of 26% stake. RVL will hold 40.95%
stake via preferential allotment (25.33%) and acquisition of stake from existing
promoters (~15.62%).

RVL will get 25.33% stake in the company via preferential allotment of 2.12 crore
shares at a price of | 1022.25 per share. Further the company will acquire 15.62%
stake (1.31 crore shares) from VSS Mani (existing promoters) at a price of | 1020 per
share.

Exhibit 1: Modes of acquisition by RVL

Mode No of Shares (in Crore) Price per share (in |) Amount (in | crore) % stake
Preferential allotment 2.1 1,022 2,165 25
Acquisition from promoters 1.3 1,020 1,332 16
Open offer 2.2 1,022 2,222 26
Total 5.6 1,022 5,719 67
Source: Company, ICICI Direct Research

JDL in its call indicated that the transaction is expected to be completed post
approval in EGM in August. Post that open offer could take one to one and a half
months.

Key takeaways of recent conference call

Q1FY22 Earnings Conference Call highlights
 The capital infused by RVL will help JDL to improve its JD Mart’s content,
help in developing end to end capability (by building tech, logistics,
payment etc), leadership team to monetise & develop better content. Apart
from JD Mart, the company’s focus also includes its JD B2C app and JD
Omni

 RVL will benefit from ~30 million listing on JDL. The acquisition was done
by RVL as it is closer to SMEs. In addition, further synergies can be explored
across the Reliance group. At present, the B2B & B2C platforms are expected
to be under JDL branding. A detailed strategy will be known in subsequent
quarters

 Post the transaction, VSS Mani will continue to hold MD & CEO post and will
have holding of ~10%

 The current quarter revenues & margins were impacted by Covid and is
expected to improve in coming quarters

 The company invested | 50 crore in advertising in Q1FY22 for branding of

JD Mart

 The company is currently focusing on JD Mart’s content & sales while

monetisation will take a few quarters

 The company’s employees declined in the quarter by 1358 to 6935 due to

non-replacement of attrition

ICICI Securities | Retail Research 2

 Company Update | Just Dial Ltd ICICI Direct Research

Financial Summary

Exhibit 2: Profit & loss statement (| crore) Exhibit 3: Cash flow statement (| crore)
FY20 FY21 FY22E FY23E FY20 FY21 FY22E FY23E
Total Revenues 953 675 773 997 Net profit before Tax 352 255 267 507
Growth (%) 6.9 (29.2) 14.5 29.1 Depreciation 52 42 42 42
COGS 533 443 479 588 (inc)/dec in Current Assets 15 (2) (11) (25)
Other Expenses 147 77 170 130 (inc)/dec in current Liabilities (85) (1) 73 169
EBITDA 273 155 124 279 CF from operations 153 139 138 312
Growth (%) 19.2 (43.3) (20.2) 125.9 Other Investments (125) 178 194 278
Depreciation 52 42 42 42 (Purchase)/Sale of Fixed Assets (2) (4) (5) (6)
Other Income 140 150 194 278 CF from investing Activities (127) 174 189 272
Interest paid 9 7 8 8 Inc / (Dec) in Equity Capital 4 1 2,165 -
PBT 352 255 267 507 Othes (30) (19) (19) (19)
Growth (%) 22.0 (27.6) 5.0 89.7 Dividend & Buyback - (273) (110) (198)
Total Tax 79 40 48 112 Interest Paid on Loans (0) - (8) (8)
PAT 272 214 219 396 CF from Financial Activities (27) (291) 2,029 (225)
Adjusted PAT 272 214 219 396 Cash generating during the year (1) 22 2,356 360
PAT 31.6 (21.4) 2.4 80.4 Opening cash balance 41 40 61 2,418
EPS - diluted 42.0 33.0 26.4 47.6 Closing cash 40 61 2,418 2,777
EPS (Growth %) 31.6 (21.4) (20.1) 80.4 Source: Company, ICICI Direct Research
Source: Company, ICICI Direct Research,

Exhibit 4: Balance Sheet (| crore) Exhibit 5: Key ratios

FY20 FY21 FY22E FY23E (Year-end March) FY20 FY21 FY22E FY23E
Equity 65 62 83 83 Per share data (|)
Reserves & Surplus 1,223 1,202 3,456 3,654 Adjusted EPS (Diluted) 42.0 33.0 26.4 47.6
Networth 1,288 1,264 3,539 3,737 BV per share 198.7 195.1 426.2 450.0
Minority Interest - - - - DPS - - 13.2 23.8
Total Debt - - - - Cash per Share 6.1 9.5 291.1 334.5
Other long term liabilities 117 116 133 171 Operating Ratios
EBITDA Margin (%) 28.6 22.9 16.0 28.0
Source of funds 1,404 1,380 3,672 3,908 EBIT Margin (%) 23.2 16.7 10.5 23.8
PAT Margin (%) 28.6 31.7 28.4 39.7
Net Block 63 46 32 19 Creditor days 9 8 8 8
CWIP - - - - Return Ratios (%)
Other intangible assets&Goodwill 1 1 0 (0) RoE 21.1 16.9 6.2 10.6
Other long term assets 1,662 1,625 1,623 1,626 RoCE 25.7 19.0 7.5 13.2
Current investments 17 - - - Valuation Ratios (x)
Other financial assets 10 11 12 16 P/E 24.7 31.4 39.3 21.8
Cash & Cash equivalents 40 62 2,418 2,777 EV / EBITDA 25.8 45.6 38.0 15.5
Loans and advances 3 2 2 2 Price to Book Value 5.2 5.3 2.4 2.3
Other Current Assets(OCA) 37 41 47 61 EV / Net Sales 7.4 10.4 6.1 4.4
Trade payables 25 15 17 22 Market Cap / Sales 9.1 12.8 11.2 8.6
Other Current liabilities 394 378 432 558 Solvency Ratios
Provisions 9 14 14 14 Debt/EBITDA - - - -
Debt / Equity - - - -
Application of funds 1,404 1,380 3,672 3,908 Current Ratio 0.1 0.1 0.1 0.1
Source: Company, ICICI Direct Research Quick Ratio 0.1 0.1 0.1 0.1
Source: Company, ICICI Direct Research

ICICI Securities | Retail Research 3

 Company Update | Just Dial Ltd ICICI Direct Research

RATING RATIONALE
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined
as the analysts' valuation for a stock
Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%;
Sell: <-15%

Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com

ICICI Direct Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com

ICICI Securities | Retail Research 4

 Company Update | Just Dial Ltd ICICI Direct Research

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ICICI Securities | Retail Research 5