The local search platform’s market capitalisation has dropped below Rs 4,650 crore, lower than the Rs 5,703 crore cash and investments reported at the end of the April-December quarter of the ongoing financial year 2026.
Investors often perceive such stocks as an attractive investment at a fair valuation, although such analysis is often misleading. A high cash holding also raises questions about what the company plans to do with it – use it for growth or give it away to shareholders as dividends. JustDial hasn’t made any such announcements so far this year.
Value buy or classic trap?
JustDial’s asset allocation policy is not very clear, as the company is neither using the cash on books for growth nor distributing it among the shareholders, said Sunny Agrawal, Head of Fundamental Research at SBI Securities. “Going by the text book theory, Justdial appears to value buy. However, lack of clear communication on strategy to deploy the cash on books is leading to sub par valuation for the company,” the analyst said.
Agrawal advised investors to wait and watch for a clear capital allocation policy, as this can be a “classical value trap”.
Notably, JustDial shares have tanked sharply over the recent years, falling over 35% in the past one year, and 44% in the past five years. Overall the stock is down 16% since its market debut back in 2013.
In July 2021, Reliance Industries’ retail arm Reliance Retail Ventures (RRVL), bought a controlling stake of over 67% in Just Dial through a combination of purchasing shares from founder VSS Mani, a fresh capital infusion and an open offer, all for a little over Rs 5,700 crore, valuing the company at Rs 8,500 crore.The market value of the company has sharply declined since then, and so has the value of Reliance’s stake in it. Reliance Retail Ventures currently holds a promoter stake of 63.84% in the company, according to data on the firm’s shareholding pattern as of the end of the December quarter of the ongoing FY26.
Earlier in January this year, the company reported a 10.2% year-on-year decline in consolidated net profit to Rs 118 crore for Q3 FY26. The decline was attributed to a higher effective tax rate and a one-time exceptional expense related to past service costs arising from the implementation of new labour codes.
Operating revenue for the quarter rose 6.4% YoY to Rs 305.7 crore during the quarter under review. Operating EBITDA amounted to Rs 95.2 crore, delivering a robust EBITDA margin of 31.2%.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)