We believe the stock correction of 33% YTD (vs a 5% decline in Nifty) provides an attractive entry point. We retain our SOTP-based TP of R1,800, implying a valuation of R1,300 for core search (30x FY19F EPS discounted to 1-year fwd) and R500 for the marketplace business (1x FY19F GMV discounted to 1y fwd). We expect strong revenue/EPS CAGR of 31%/35% over FY15-19F.
We believe Justdial’s new Android app launched last weekend is a step-jump improvement over the previous version across look and feel, flow, categorisation of Search Plus offerings and newer features. This, coupled with the launch of an advertising campaign in multiplexes, should allay investor fears of a further delay in the commercial launch of Search Plus beyond September.
Further, our interaction with senior management handling Search Plus execution and Search sales for regions like Mumbai and Madhya Pradesh gives us comfort on execution focus, progress and monetisation possibilities in Search Plus, while maintaining a steady revenue CAGR of 25%+ in the Search business over FY15-19F. While there has been a near two-quarter delay in the Search Plus commercial launch, we remain enthused by: 1) the lower likelihood of further delays; 2) Progress on Search Plus, with 28 services live across web/app platforms.
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