Target: ₹1,060

CMP: ₹879.90

JustDial has reported robust revenue growth of 20 per cent y-o-y despite seasonally weak Q3. This beat our estimates of 17.7 per cent by 200bps. Growth was led by continued momentum in paid campaigns (up 8.6 pe cent y-o-y/1 per cent q-o-q) and total active listings (up 18.8 per cent y-o-y/4 per cent q-o-q).

Sequential moderation in revenue growth (up just 1.7 per cent) was due to softer growth of 1.1 per cent in active paid campaigns led by lower traffic led given the festive season. However, expect it to bounce back with higher single-digit sequential growth in Q4, which is historically the strongest quarter for JustDial. Furthermore, 17.5 per cent y-o-y deferred revenue growth continuously remained healthy, indicating positive near-term growth outlook.

With ₹4,205 crore cash (56 per cent of the market cap), the core business is trading at an attractive 16.7x. We value the company via an average of P/E and DCF. We roll forward to Dec-24, raising our TP to ₹1,060 (an average of P/E-TP of ₹1,254 and DCF-TP of ₹862) from ₹1,000 before.

On P/E, we value JustDial on one-year forward target P/E of 28x (in line with pre-pandemic five-year average). We reiterate Buy on: strong cash chest, improving operational parameters and robust deferred revenue growth, indicating better revenue growth outlook.