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Strong paid campaign addition likely to continue

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

* Reliance Retail Ventures now holds a 67% stake in JDL

* JDL’s launch of B2B platform will be a key revenue driver in the long run

Q3FY23 Results: JDL’s revenue rebound continued in Q3FY23.

Revenues grew 7.8%QoQ to | 221.4 crore

* Paid campaigns grew 3.6% QoQ while realisation grew 4.1% QoQ

* Adjusted (ex-Esop) EBITDA grew ~380 bps QoQ to 13.3% to | 29.4 crore

What should investors do? JDL’s share price has grown by ~1.1x over the past five years (from ~| 573 in January 2018 to ~| 643 levels in January 2023)

* We maintain our BUY rating on the stock

Target Price and Valuation: We value JDL at | 760 i.e. 23x P/E on FY25E EPS.

Key triggers for future price performance:

* Continued increase in paid campaigns as well as realisation growth

* Ramp up in sales team is expected to drive revenue growth in both B2B and B2C businesses

*JDL will be a key beneficiary of this shift of advertising to digital medium and underpenetrated MSME (B2B) segment. The paid subscribers as a percentage of total MSME is just 1.5%

* JDL’s B2B and B2C platforms are well placed to capture this demand leading to revenue CAGR of 23% in FY22-25E

Alternate Stock Idea: Apart from JDL, in our IT coverage we also like Affle.

* Key beneficiary of digital advertising spend

* BUY with a target price of | 1,350

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