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Robust margin doubles EBITDA; cash distribution on the cards

Just Dial’s EBITDA grew ~120% YoY (+14% QoQ) to INR 806mn, ahead of JMFe by c.4%, led by robust margin expansion of 13.9ppts YoY (+260bps QoQ). This was the 9 th consecutive quarter of sequential margin improvement, an overall expansion of 32.5ppts since 4QFY22. Revenue was broadly in-line JMFe despite net paid campaign additions of 7.9k QoQ being a tad lower than our estimate of 9k. While collections growth was muted at 5.4% YoY, the management attributed it to general elections in April-May and indicated a sharp recovery in trends in June. We conservatively build revenue growth of 13.5% over the medium term vs. the management target of above mid-teens. We reiterate that EBITDA growth in FY25 could be very robust at c.60% YoY, as full impact of the recent margin expansion is yet to come in the base. Plans to distribute full year profits/cash generated to shareholders could drive significant value unlocking as yield on payouts could be >6% at CMP (basis FY25 estimates). Valuations too are very compelling at 12x/8x FY26/27 ex-cash EPS. We maintain BUY.

* Decent revenue growth aided by expansion in lower tier cities and reducing churn rates: Revenue grew 13.6% YoY (+3.8% QoQ) to INR 2.8bn, in-line JMFe. Paid campaigns increased 7.9k QoQ to ~592k (+16.7k/+10k in 4QFY24/1QFY24). Average realisation too improved 5% YoY to INR 19.1k (+1.6% QoQ). Revenue contribution of beyond top 11 cities increased to 42% in 1QFY25 from 40% in 1QFY24. Moreover, majority of the paid campaign sign-ups are happening on monthly payment plans, which, in turn, has helped reduce churn rates by 400-500bps to ~40%, as per the company. We forecast revenue CAGR of 13.5% over FY24-FY27, 1.3x of CAGR reported over FY15-FY20, factoring in steady increase in paid campaigns as well as realisation.

* Robust margin expansion drives 120% YoY EBITDA growth: Just Dial’s EBITDA margin in 1Q expanded 13.9ppts YoY (+2.6ppts QoQ) to 28.7%, ahead of JMFe by 101bps, on the back of robust cost control. Employee cost was down 5.3% YoY due to rationalisation of workforce across sales as well as non-sales functions, while other expenses were down 2.5% due to tight control over A&P spend and communication cost. As a result, EBITDA growth was robust at 120% YoY to INR 806mn (+14% QoQ), a beat on JMFe by 3.6%. The management indicated cautious usage of A&P spend to drive traffic growth,

* Board considering cash distribution policy: The management mentioned that the board is considering various avenues such as dividend, buyback or any other means to ensure tax efficient distribution of 100% (or higher) of the company’s annual profits or incremental cash generated to shareholders. At CMP, the yield on payouts could be more than 6% assuming full distribution of FY25 PAT or FCFF plus other income.

* Reiterate BUY, raise TP to INR 1,300: We raise our EBITDA estimates over FY25-27 by 3- 6% driven by 100-175bps expansion in margin forecasts and expect Just Dial’s core PAT (i.e., ex-other income) to expand by 2.3x from INR 1.3bn in FY24 to ~INR 3.0bn in FY27. We roll forward to Sep’25 and now value the stock basis 20x core business EPS + Cash (vs. 18x earlier) to derive a revised TP of INR 1,300 (vs. INR 1,160 earlier).

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SEBI Registration Number is INM000010361