MUMBAI: Just Dial Ltd’s March quarter results show steady traction in its listings business before the covid-19 disruption. Revenue grew 1.2% from the year ago quarter. Thanks to lower costs, operating earnings grew at a faster pace of 26.4%.
Total listings on the company’s platforms grew 14.1%. Other metrics such as paid campaigns and total app downloads also grew at a decent pace.
But the momentum lost steam as covid-19 induced lockdown halted business activity. Total traffic on the company’s platforms halved in April, the management told analysts. Traffic recovered in May, but only to 65% of the pre-lockdown levels.
As a consequence, performance in the current quarter (Q1 FY21) can be hit significantly. “Management mentioned that the company’s collections and revenue growth has been severely impacted in the months of April and May due to the ongoing Covid-19 lockdown. While paid campaigns were down by around mid-teens in the third week of May, realisations are also under severe pressure due to discounts and relaxed payment plans offered to customers," JM Financial Institutional Securities Ltd said in a note.
That said, the company is realigning its cost base to changed circumstances. It curtailed advertisement spends, variable payouts, renegotiating rents, among others. This, the company believes, should help it achieve cash break-even.
“Just Dial managed to achieve cash-flow break-even in the month of April despite a sharp fall in sales activity, led by effective management of cost. Just Dial has currently managed to lower its monthly cost run-rate to ₹35-40 crore (vs ₹55 crore in 4QFY20)," Nomura research said in a note.
The rationalization of costs should help the company withstand the current slowdown better. Further, with digitization gaining prominence across industries, Just Dial should be better placed to benefit from rebound in the market.
What is uncertain though is the timing and pace of the recovery. With covid-19 infections continuing to rise and major cities placed under restrictions, business may remain dull in near term. While the stock saw noticeable recovery from the lows in March, it is still down 45% from the year ago levels.