Just Dial’s share price drops 4% following profit booking after Q2 results

Just Dial's shares experienced a notable decline of 4% on Monday, driven primarily by profit booking following a strong performance in the wake of its Q2 results. After opening at ₹1,306.85 on the Bombay Stock Exchange (BSE), the stock peaked at ₹1,313 before hitting an intraday low of ₹1,253. 

Analysts suggest potential investors should carefully consider the stock's performance and wait for a breakout above ₹1,380 before deciding to invest in stocks like Just Dial.

Q2 performance overview

In its recently announced Q2 results, Just Dial reported a consolidated net profit of ₹154 crore, more than doubling compared to the same quarter last year. The company's revenue from operations surged to ₹284.83 crore, up from ₹260.61 crore a year ago. However, the results also revealed a dip in EBITDA margins, which came in at 28.8%, slightly below the estimates of 29.3% made by Nuvama Institutional Equities. Analysts noted that while the company's profit after tax (PAT) exceeded expectations, the revenue growth did not meet projected figures.

Nuvama pointed out that the unearthed revenues showed growth of 3.1% on a quarter-over-quarter basis, reflecting a slight recovery from the previous quarter marred by election-related headwinds. Despite this, deferred revenue growth has slowed down on a year-over-year basis. As a result, Nuvama revised its target price for Just Dial to ₹1,250, maintaining a 'HOLD' rating, which suggests a cautious approach for those looking to invest in stocks at this moment.

Analyst insights and market sentiment

Rajesh Bhosale, an Equity Technical and Derivative Analyst at Angel One, emphasised that the inability to break past the ₹1,380 mark has prompted profit booking. He maintains a positive outlook on the overall trend but advises potential investors to wait for a clear breakout before making any moves. Any dip towards ₹1,230 is seen as a buying opportunity, making it a strategic point for those considering investing in stocks.

Moreover, ICICI Direct Research noted a 9.3% year-over-year increase in unique visitors to Just Dial's platform, indicating strong engagement and a steady rise in organic traffic. This growth, driven by enhanced content quality and user experience, positions the company favourably for medium- to long-term growth, further encouraging potential investors.

Key takeaways

• Just Dial's share price fell 4% due to profit booking after a significant rise in post-Q2 results.
• The Q2 report showed strong net profits but missed revenue growth estimates, leading to cautious analyst ratings.
• Analysts suggest waiting for a breakout above ₹1,380 before considering investments, with a dip to ₹1,230 viewed as a potential buying opportunity.
• Increased user engagement and a focus on B2B segment growth suggest positive long-term prospects for the company, making it an intriguing option for those looking to invest in stocks.