A positive network effect on business of JustDial would imply strong volume growth without commensurate increase in sales force, higher realizations, and improving margins. Currently, Just Dial is going through a phase where higher volumes are supported by continuous addition to its sales force; lower realizations, with price increases on renewals becoming difficult to obtain; and margins taking a step down.
The company's execution has been slow and weak in the Search Plus business. Currently it is in initial stages where adoption by both vendors and users is yet to be seen and there are limited early signs of success. We have assumed value for Just Dial's Search Plus business only in our bull case scenario with a low probability of 10%.
The growth in unique visitors has declined to single digits in the last two quarters. Meanwhile, the company also tweaked its strategy and launched JD Omni to drive increased vendor adoption; however, the start remains slower than it expected.
