Just Dial’s revenue growth for Core Search business has decelerated meaningfully over the last few quarters. While growth may have bottomed out, the initiatives taken by the management will take a few quarters to yield results, in our view. Management reiterated that the slowdown in revenue growth was not led by any increase in competitive activity, but due to a lesser focus internally on the search business. It plans to add 2,000-2,500 people to its sales team (both tele-sales and “feet on street”) over the next 9-10 months, which should address the issue of growth.
The total listings on Just Dial platform is ~16mn and it has the potential to move up to 20-25mn. It is planning to start a program of accelerated on-boarding of vendors to its platform similar to the last year.
The company plans soft launched the fully functional Search Plus App and its technology product for vendors called Just Dial Omni on February 25, post which the mass communication campaign will start. It plans to start its budgeted ad campaign of Rs1bn (75% television and 25% digital) in a staggered manner over the next few quarters. Currently, JD Omni is on a trial and it will launch Omni with customized version for every different category of vendors (for example doctors, restaurants, grocery shops, etc.).
Overall, management believes the revenue potential for Search Plus is unlikely to be comparable to the Search business in the near term as it is going to account only for t he net margins that accrue to Just Dial as its revenu es. Currently, it gets negligible revenue from Search Plus services and indicated that the burn rate on new products could reach Rs30-40m per month.