Just Dial Shares Slide 6% on 10% Q2 Profit Drop, Margin Squeeze

Just Dial Faces Pressure as Q2 Profit Declines Amid Margin Squeeze

Shares of Just Dial fell over 6% following a disappointing quarterly earnings report, raising concerns about its profitability and operational efficiency.

Q2 Results: Profit Decline and Revenue Growth

Just Dial’s consolidated net profit for the July-September quarter fell by 9.73% year-on-year to ₹107.8 crore, down from ₹119.44 crore in the same quarter last year. This decline in profitability comes despite a 13.11% increase in revenue from operations, which rose to ₹342.82 crore compared to ₹303.07 crore a year earlier. The company attributed its revenue growth to a 7.5% increase in revenue per paid campaign and a 5.2% rise in the number of paid campaigns.

Operating EBITDA increased by 4.1% year-on-year to ₹90.7 crore, but the EBITDA margin contracted by 228 basis points to 26.4%. This margin squeeze highlights the challenges Just Dial faces in maintaining profitability amid rising operational costs.

Market Reaction and Technical Analysis

Following the earnings announcement, Just Dial shares opened nearly 3% lower at ₹708.05 and continued to slide, hitting an intraday low of ₹688.06. As of mid-morning trading, the stock was down 4.8% at ₹696.80, with approximately 1.5 million shares changing hands. This marked a significant reversal from its recent gains, as the stock had reached a high of ₹802 on October 19.

Technical analysts suggest that the stock is facing resistance around the ₹790–800 range, which it has struggled to break through. Conversely, support is anticipated in the ₹640–630 zone, and a breach below this level could lead to increased selling pressure.

Future Outlook and Analyst Ratings

ICICI Securities has maintained a ‘Buy’ rating on Just Dial, raising its target price from ₹800 to ₹850. The brokerage noted that while the company’s strategic reinvestments in AI and B2B services may have impacted margins in the short term, they are expected to support long-term growth. However, analysts caution that the lack of clarity regarding cash distribution and slowing growth in paid campaigns could pose risks to the stock’s performance.

Investors are advised to monitor the company’s ability to sustain growth and improve return on investment, as these factors will be crucial for any potential re-rating of the stock in the future.

Key Highlights

• Just Dial’s Q2FY27 net profit declined by 9.73% year-on-year to ₹107.8 crore.
• Revenue from operations increased by 13.11% to ₹342.82 crore.
• Operating EBITDA rose by 4.1%, but EBITDA margin contracted to 26.4%.
• Shares fell over 6% post-earnings announcement, hitting an intraday low of ₹688.06.
• ICICI Securities raised the target price to ₹850, maintaining a ‘Buy’ rating.

Investor Note: Investors should remain cautious as Just Dial navigates margin pressures and seeks to leverage its investments for future growth. Monitoring operational metrics and market conditions will be essential for assessing the stock’s potential recovery.