Mumbai: Shares of Just Dial Ltd have been going through gruelling times, and are currently almost 30% below the issue price of June 2013 when it made its stock market debut, as analysts raise questions on the innovation and fierce competition for the internet search engine.

On Monday, Just Dial shares closed at Rs373.65, down 29.5% from its issue price of Rs530 per share. The stocks were listed on 5 June 2013, and had gained a whopping 171.71% since the listing to the end of 2013.

However, the stock dropped 6.11%, 37.72% and 59.80% in 2014, 2015 and 2016, respectively. For year-to-date, it is up 10.37%, underperforming the benchmark index Sensex, which has gained 21.21% in the same period.

In a note on 3 August, Edelweiss Securities Ltd said that while Just Dial’s revenue and earnings growth has plummeted in the past few quarters, they need to monitor its web traffic rankings once intensity of the advertisement campaign wanes; and trajectory of listings, web traffic and paid campaigns with integration of new features like instant messenger, analytics and customization options.

“We maintain our cautious view currently, but will keep a close watch on the above metrics," Edelweiss analysts said, while maintaining reduce rating on the stock.

The net profit of Just Dial has dropped in five out of the last seven quarters, data from Capitaline showed, and revenues have registered single-digit percentage growth in six of the seven last quarters.

Margins in the June quarter, however, saw a boost on the back of lower employee expenses.

“Despite improvement in usage metrics and margins in the quarter, we maintain our underperform rating on Just Dial due to our continued concerns on core business model, competitive pressure and execution," Jefferies said in a note on 25 July.

Currently, 14 brokerages have a sell/reduce/underperform rating on the stock, while five have a buy or outperform rating, while three recommend hold or neutral rating on the stock, data from Bloomberg showed.

“The internet and technology space is a very evolving one and because of that companies like Just Dial are required to change the business model every few years. They started with local search model, and that is easily replaced by various apps that are available," said Deven Choksey, group managing director at KR Choksey Investment Managers Pvt. Ltd.

“They require good innovation. Search needs to be more interactive, and novel in nature, providing an edge over other options available to the user," added Choksey.

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