I agree.
In my opinion, there are still levers for decent growth given the much lower blended ARPU (relative to India Mart) along with rising growth of B2B share (which has better retention and pricing power).
And offcourse, in case the management announces any capital allocation policy, it generally will be too late to enter at that time.
4 Likes
you are right ,in many terms its a fantastic stock.
but we small investors missing something,
zomato ,swiggy values 2.5 and 1 trn respectively. they can easily build 3rd company with same business model, by using its own cash. they can also think of like Blinkit or zepto. but what Mr.ambani is thinking we all dont know.
but āBhav bhagvan cheā¦ā so withing 1 or2 yr it will reflect in the price. Till then i dont find any reason to worry for small stake holders.
Disc. Holding large portion of my PF.
3 Likes
1 Like
Just Dialās current market cap is 8000cr and ex Cash / Investments is currently valued at just 3000cr.
Now, comparing this with IndiaMart which is in a very adjacent business similar to JD is valued at 13000cr and exc. cash has a valuation of 10K crore.
Last TTM op profit of JD is 320cr vs Indiamart at 390cr.
Could anyone throw light on why Indiamart is valued more than 3x of JD for just 20-25% higher op profits.
My understanding of both businesses is limited and maybe Iām missing something basic that explains such a wide valuation gap for both. Or market fears capital misallocation risk much more strongly for JD than for Indiamart.
2 Likes
In any business we should not simply net off investments from market cap, that can be deceptive. In this, company holds 5000 crores and say you are a investor who are looking to earn 15% return. Now if you value their investments as 5000 crores, then expectation should be company is ready to payout 5000 crores right away, but as you see there is no clear indication of what they gonna do. Say hypothetically, they give away this 5000 crores after a year, in that one year, this 5000 crores yields 6%, but for you this does not make sense. So you have to value this book by lower value like 4700 crores. if company plans to payout this after 2 years, then you have to think like this book is 4300 crores.
Right now we have zero clarity on what will they do with 5000 crores, so they may do a lousy deal to acquire a company or keep this cash forever without any proper plan. So apply some discount, say 25%. Now this cash is valued at 3750 crores and their operating business with yearly PAT of 200 crores valued at 3250 crores. With slow growth that JD is showing when compared to IndiaMart, this seems a fair valuation. Market is simply waiting for managementās action on paying dividend from free cash flow that it generates from operating business and that 5000 crores. When these two event occurs, market will rerate. But definitely JD should trade cheaper than IndiaMart because of the fundamentals
6 Likes
There are two ways to do it. One is to do it as a sum of parts.
- Core business giving cash flow discounted at hurdle rate.
- Investments giving cash flow discounted at hurdle rate (this will become smaller every year like you said). If one knows when it would be given back then one can account for it similar to dividend or not.
The other way I understand is the Enterprise Value method, where the impact of investments is point in time.
If I am buying this company then I am not really paying the stock price but a smaller amount, as I assume that I have the cash belonging to me.
I am guessing that, given their track record, of being non-commital of sharing cash with shareholders - using the first method may be more appropriate.
3 Likes
According to me Biggest issue currently with justdial is they stopped doing concalls this is 2nd qtr in a row when they have stopped speaking with investorsā¦many questions which were asked in calls are being avoided
What about myjio integration, dividend distribution policy, any new initiatives on monetisation of cash?
What percentage of revenues coming from b2b side? Any possibility of cross selling initiatives with jio?
Current market cap is about 7600 cr less 5050 cr of cash so we are getting whole company at 2550 cr against an fy25 ebitda of about 330 crā¦
dirt cheap none of the listed peers in online space available at such a throwaway priceā¦its high time management should do something about this
Disc
Invested and planning to add more on dips
5 Likes
i found JD to be the most atractive value propotion in entire market ā¦ ā¦ due to presence of huge cash pile, existing business and presense of reliance group.
Reliance is known for larger than life future trend prediction,then planing ,and execution . so i am waiting for the picture to be clear.
But at the same time the dark part is "Its not so investor friendly , they do all Tac-tics and then give reasonable pile to the small stake holders:-) ā¦
i want to understand is there any chances of getting sold to the Google or they became partner in any vertical, because RIL have tendency to partner with such huge players like they have done with Blackstone in Jio fin.
Disc. invested large portion of my PF.
3 Likes