Revenue rises 13.1% year-on-year, but weaker profitability and margin pressure weigh on investor sentiment; brokerage ICICI Securities retains its Buy rating and raises the target price to ₹850
Shares of Just Dial came under pressure on Wednesday after the local search and business discovery platform reported a nearly 10% year-on-year decline in consolidated net profit for the September quarter of FY27. The stock fell as much as 6% intraday as investors assessed the gap between revenue growth and profitability, alongside concerns about operating margins and the pace of growth in paid campaigns.
The company, which is owned by Reliance Retail Ventures, reported consolidated net profit of ₹107.8 crore for Q2FY27, down 9.73% from ₹119.44 crore in the corresponding quarter of the previous financial year. Despite the decline in earnings, revenue from operations increased at a double-digit pace, indicating continued growth in the business.
The market reaction suggests that investors are paying close attention not only to revenue expansion but also to the company’s ability to translate that growth into higher profits and sustainable margins.
Revenue Grows 13.1%, but Profitability Remains Under Pressure
Just Dial reported revenue from operations of ₹342.82 crore in Q2FY27, compared with ₹303.07 crore a year earlier, representing year-on-year growth of 13.11%.
The company attributed the increase to improvements in revenue per paid campaign and the number of paid campaigns on its platform. Revenue per paid campaign rose 7.5% year-on-year, while paid campaigns increased 5.2%.
However, the stronger topline performance did not translate into higher net profit. The decline in earnings highlights the importance of operating expenses, strategic investments and other costs in determining the company’s final profitability.
For investors, the key question is whether Just Dial can sustain revenue growth while improving cost efficiency over the coming quarters.
EBITDA Rises 4.1%, but Margin Contracts
Operating EBITDA stood at ₹90.7 crore in the September quarter, up 4.1% from ₹87.1 crore in the corresponding period last year.
Despite the increase in operating earnings, the EBITDA margin contracted by 228 basis points year-on-year to 26.4%. This indicates that operating profitability did not keep pace with revenue growth.
According to ICICI Securities, strategic reinvestment affected margins during the quarter. Investments in artificial intelligence and business-to-business offerings could support the platform’s longer-term development, but their financial benefits will depend on execution and the returns generated over time.
The ability to stabilise margins while continuing to invest in new capabilities will therefore be an important performance indicator for upcoming quarters.
Paid Campaigns and User Engagement Show Growth
Just Dial’s operating metrics presented a mixed but broadly constructive picture.
The number of paid campaigns increased 5.2% year-on-year and 2.7% sequentially to approximately 6.57 lakh. The company added around 17,000 paid campaigns during the quarter on a sequential basis.
Unique visitors rose 2.8% quarter-on-quarter but remained broadly flat year-on-year. Meanwhile, user engagement measured through ratings and reviews increased 6% year-on-year and 2.2% sequentially to 164 million.
These figures suggest that monetisation and engagement indicators are improving in some areas, although the lack of year-on-year growth in unique visitors remains worth monitoring.
For a local discovery platform, the long-term growth opportunity depends on attracting users, retaining businesses and persuading more merchants to pay for greater visibility or enhanced services. Sustained growth in paid campaigns will be particularly important for revenue generation.
AI and B2B Offerings Could Shape Long-Term Growth
Just Dial is investing in artificial intelligence and expanding its business-to-business offerings as it seeks to strengthen its platform and improve monetisation opportunities.
AI-based tools could potentially improve search relevance, business discovery and the matching of consumers with service providers. B2B services could also help the company deepen its relationships with businesses seeking customers and commercial leads.
However, these opportunities come with execution risks. Investment spending can weigh on near-term margins, while the benefits may take time to materialise. The company will need to demonstrate that these initiatives generate measurable improvements in customer engagement, paid subscriptions and profitability.
Investors will likely focus on whether the new investments produce sustainable returns rather than simply increasing operating costs.
ICICI Securities Retains Buy Rating, Raises Target to ₹850
ICICI Securities maintained its Buy rating on Just Dial and raised its target price to ₹850 per share from ₹800.
The brokerage identified investments in AI and B2B offerings as potential long-term growth drivers. However, it also highlighted the need for sustained growth and a clear return on investment before the stock can achieve a meaningful valuation re-rating.
The brokerage identified the absence of clarity on near-term cash distribution and slowing growth in paid campaigns and listings as downside risks.
The revised target price represents the brokerage’s assessment rather than a guaranteed future price. Actual performance will depend on earnings, market conditions, investor expectations and the company’s ability to deliver on its growth strategy.
Technical Outlook: ₹790–800 Resistance, ₹630–640 Support
From a technical perspective, SBI Securities’ Sudeep Shah noted that Just Dial corrected after reaching approximately ₹802 on October 19. The stock had again struggled to decisively cross its 200-week exponential moving average, an area that had also acted as resistance in July.
According to the technical assessment, the ₹790–800 range is an important resistance zone. A decisive move above this band could indicate renewed upward momentum.
On the downside, the ₹630–640 range is viewed as a potential support zone. A decisive breakdown below this area could increase selling pressure.
These levels are technical reference points, not certain price outcomes. The stock’s movement will also depend on earnings expectations, market sentiment and broader trading conditions.
Market Outlook
Just Dial’s Q2FY27 results highlight a business that continues to expand revenue but faces pressure on profitability. Revenue growth of 13.1% and higher operating EBITDA provide positive signals, while the 9.73% decline in net profit and 228-basis-point contraction in EBITDA margin remain important concerns.
The next phase of performance will depend on whether growth in paid campaigns can accelerate, visitor engagement can improve and investments in AI and B2B services begin generating stronger returns. Investors should also monitor operating expenses and the company’s approach to cash distribution.
While ICICI Securities’ revised ₹850 target reflects confidence in Just Dial’s longer-term potential, the near-term outlook remains dependent on execution and technical resistance. A sustainable recovery would require improving earnings quality and stronger evidence that revenue growth can translate into better margins and shareholder returns.