Reiterate ‘buy’ on Justdial with target price of Rs 1,800 per share. We value Justdial using SOTP value: 1) the marketplace business at a multiple of 1x FY19f GMV discounted back to one year from now; and 2) local search business at an exit multiple of 30x FY19f EPS, discounted back to one year from now.
Justdial’s app ranking has seen a sharp jump and the improvement in app rankings is a good start. As app. rankings are determined by factors such as the title, targeted keywords, number of downloads, download velocity and positive ratings. The sharp improvement in app rankings is an encouraging start, in our view.
Sustaining these rankings will be important, as there are factors like download velocity that drive rankings, which could come off after the initial excitement. Next trigger for the stock is commercial advertising on TV and in print and the launch of its evangelist campaign, which we believe should happen this month.
After which, the key thing to watch will be the pickup in transactions in the individual search plus categories, which we believe should start to be reported by the company towards end of the year.
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