Citi reiterates ‘Buy' on Just Dial shares; sees valuation comfort and growth optionality after Q1 results
Citi has maintained its 'Buy' rating on Just Dial, setting a target price of ₹1,100, despite a slowdown in both revenue and user traffic growth in the June quarter. The brokerage believes undemanding valuations and a strong cash position give the company room for strategic capital allocation and long-term growth.
In Q1FY26, Just Dial's revenue growth slowed to 6% year-on-year, slightly missing Citi's estimates by 2%. More significantly, user traffic growth decelerated to 7% YoY, raising concerns about engagement and platform stickiness. This comes after several quarters of strong digital adoption and outreach following Reliance Retail's acquisition of the platform.
Citi highlighted that in FY25, strong cost control had led to a sharp margin expansion, with EBITDA margins improving by 800 basis points to 29%. However, it warned that margins are likely to moderate in the near term as the company will need to reinvest aggressively into customer acquisition, product innovation, and geographic expansion to maintain its leadership in the local discovery space.
Despite the soft growth prints, Citi finds the valuation extremely attractive. At less than 8x ex-cash Mar'27E PE, Just Dial trades at a significant discount to broader internet peers. Furthermore, the brokerage noted that the company's large cash reserves could be deployed for share buybacks, special dividends, or inorganic growth, which may serve as upside triggers.
Citi continues to see Just Dial as a strong long-term digital play in India's underpenetrated local business services market, particularly given its deep integration within Reliance's broader digital commerce ecosystem.
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