Just Dial: First Mover of Indian Local Search Market

I guess only a few people have done their home work in this story including – @rajpanda
This is getting extremely interesting since April, 2023. Both the quarters of Fy24 so far have produced results in line with management guidance and expectation. Look at their PPT.

• Active Paid Campaigns
• Total Active Business listings
• Quarterly unique visitors (users)
• Penetration in tier 2+ cities
• Realizations per customer

All the above metrics have been consistently increasing in last 6-7 quarters after hitting the rock bottom in 2021. In fact in the latest quarter, all are above pre-covid levels.
On top of that the employee count is going to remain steady as per mgmt. going forward which will contribute to better margins and profitability. This is a very prudent approach taken by the mgmt to maximise profitability – just read their concall to understand their reasoning. Their advertising has become more efficient, prod. development expenses aren’t going increase further as they have already invested in development of JD Experts, Omni and Mart.

I see only 2 big threats in this story:

1. Capital allocation: CFO himself is not clear what would be done with 4200cr of cash which is currently giving 7.2% yield. He is deferring those decisions to the board which consists mainly of Reliance folks. My guess is that the market is also quite suspicious of this and hence such valuations.
2. Doubling down of investments from Google in this space. I can see Google is getting more aggressive in Indian markets in last few years – loans via Gpay, listings on Maps, partnerships with banks and credit cards companies, etc. As of now I don’t think they have a dedicated focus in this SME space, but could happen in future…

Other than these two, there is a little bit of concern from the promoter as someone already mentioned earlier in this thread that they would try to maximise their overall value instead of this subsidaries value – conflict of interest with Jio platforms. However, I think this is quite unlikely because otherwise they wouldn’t have infused capital at 1100 share price.

@rajpanda your take?