Just Dial: JM Financial Stands Firm on 'Buy', Lifts Target Price Post Q3
Overview
JM Financial reiterates its 'Buy' rating on Just Dial, raising the target price to ₹1,060 following strong Q3 FY26 results. The brokerage highlighted a rebound in collections and an EBITDA beat driven by cost control, though traffic trends and cash distribution clarity remain key concerns for sustained upside.
Stocks Mentioned
JM Financial has maintained its 'Buy' rating on Just Dial, lifting the target price to ₹1,060 from ₹1,050 following the company's fiscal third-quarter results for FY26. The brokerage adjusted revenue estimates marginally for fiscal years 2026-28 and increased EBITDA margin assumptions, leading to a slight upgrade in earnings per share (EPS) estimates. The valuation remains anchored at 13 times core business EPS plus cash.
Q3 Performance Snapshot
Just Dial's collections, a key revenue precursor, grew by 8.1 per cent year-on-year in Q3 FY26, a significant improvement from the subdued growth seen in the preceding two quarters. Net paid campaigns also saw sequential growth. However, overall revenue growth remained modest at 6.4 per cent year-on-year, reaching ₹306 crore. Traffic trends registered a decline of 3.5 per cent year-on-year, despite increased advertising and promotional (A&P) spending, raising questions about the sustainability of collection recovery.
Earnings Surprise Amidst Cost Control
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose by a healthy 10.0 per cent year-on-year to ₹95.2 crore, surpassing JM Financial's expectations by approximately 7.5 per cent. This outperformance was primarily attributed to better-than-expected cost management, which resulted in an expansion of the EBITDA margin by 102 basis points year-on-year to 31.2 per cent. Reductions in employee costs and other operating expenses were key drivers. The company also recognized a one-time exceptional charge of ₹21.08 crore related to past service gratuity costs.
Valuation Concerns Linger
Despite the operational improvements and maintained 'Buy' rating, JM Financial emphasized that Just Dial's valuation is contingent on clarity regarding its cash distribution policy. With cash and investments comprising over 90 per cent of the company's market capitalisation, any ambiguity or delay in distributing profits could suppress stock performance. The brokerage highlighted that a 100 per cent distribution of the projected fiscal year 2025 profit after tax could yield an attractive dividend of 9 per cent at current levels.
