Just Dial’s Q3FY26 performance marks a subtle but important inflection point for the company. Revenue growth remains modest, yet margin expansion, cost discipline, and early signs of recovery in paid campaigns are beginning to reshape the earnings trajectory. ICICI Securities has upgraded the stock from ADD to BUY, retaining a target price of Rs 968, implying a potential upside of 32% from the current market price of Rs 733. The call rests not on aggressive topline assumptions, but on structurally improved profitability, a resilient cash balance, and improving operating leverage. While the lack of clarity on cash distribution remains an overhang, the recent correction in the stock has reopened an attractive entry window for long-term investors willing to tolerate near-term uncertainty.

Research house view: BUY upgrade driven by margin discipline

ICICI Securities has upgraded Just Dial to BUY from ADD, maintaining its target price of Rs 968 based on a 6x FY27E EV/EBITDA valuation framework. The brokerage highlights that the recent share price correction has priced in much of the near-term uncertainty around growth and cash utilisation, while operational metrics have quietly stabilised.

The investment thesis has shifted from pure growth optimism to execution-led profitability. With employee costs rationalised and EBITDA margins trending higher, the downside risk profile has narrowed meaningfully, even as upside catalysts remain intact.

Q3FY26 earnings snapshot: steady revenue, sharp margin improvement

Just Dial reported Q3FY26 revenue of Rs 3.1bn, representing 6.4% YoY growth and a marginal 0.9% QoQ increase. While topline momentum remains measured, the real story of the quarter lies below the revenue line.

EBITDA rose 10% YoY to Rs 952mn, with margins expanding to 31.2%, up 102 basis points YoY and 243 basis points QoQ. This improvement was driven primarily by lower employee costs following headcount rationalisation implemented in Q2FY26.

Recurring net profit climbed 5.9% YoY to Rs 1.4bn, while reported PAT declined 10% YoY due to a one-time exceptional charge of Rs 211mn linked to labour code compliance costs.

Cost rationalisation emerges as a structural lever

Employee expenses declined 2.5% QoQ, even as revenue continued to grow. This marks a clear shift in Just Dial’s operating strategy, where efficiency and return on capital are taking precedence over aggressive expansion.

Other operating expenses remained well controlled, enabling EBITDA to outpace revenue growth. ICICI Securities believes this margin profile is sustainable, provided the company maintains discipline on headcount and marketing spends.

Paid campaigns show early signs of recovery

After several muted quarters, paid campaign additions rebounded meaningfully. Net paid campaigns increased by 1.6mn in Q3FY26, up 22.6% YoY, likely reflecting the impact of renewed advertising activity during the quarter.

Total active paid campaigns reached 629k, a 4.7% YoY increase, signalling stabilisation in advertiser demand. While web traffic declined modestly, engagement metrics and listings continued to trend positively, indicating underlying platform resilience.

Sustained traction in paid campaign additions over the next two to three quarters remains a key monitorable for investors.

Collections improve, but conversion remains the real test

Collections for the quarter stood at Rs 3.1bn, up 8% YoY, reinforcing the view that revenue quality is improving. Deferred revenue remained stable at Rs 5.2bn, providing near-term visibility on future recognition.

The critical variable is conversion — whether campaign additions translate into sustained collections over coming quarters. ICICI Securities expects gradual improvement but stops short of factoring in aggressive assumptions.

Cash balance swells, capital allocation remains unresolved

Just Dial ended Q3FY26 with a formidable cash and investment balance of Rs 57bn, one of the strongest balance sheets in the Indian internet space.

Despite this, the company has yet to articulate a clear roadmap for shareholder cash distribution. This uncertainty continues to cap valuation multiples and investor enthusiasm.

Improved visibility on dividends or buybacks would be a material upside catalyst, according to ICICI Securities.

Valuation: downside protected, upside asymmetric

At the current price, Just Dial trades at 1.0x FY27E EV/EBITDA and 9.6x FY27E P/E, levels that reflect conservative growth expectations and limited terminal value assumptions.

ICICI Securities’ target price of Rs 968 is based on a 6x one-year forward EV/EBITDA multiple, implying an attractive risk-reward skew.

Support level: Rs 700
Near-term resistance: Rs 780–800
12-month target: Rs 968

Financial trajectory: steady growth with improving quality

Margins are expected to expand steadily over the forecast period, supported by operating leverage and cost control rather than aggressive revenue assumptions.

Risks to monitor

Key downside risks include continued ambiguity around cash distribution and a slower-than-expected recovery in advertiser spending. A prolonged decline in web traffic could also weigh on conversion metrics.

Upside risks stem from a clear capital return policy, stronger paid campaign monetisation, or renewed traction in high-value advertiser categories.

Investor takeaway

Just Dial is no longer a high-growth internet story — but it is evolving into a cash-rich, margin-stable digital platform with improving earnings visibility. ICICI Securities’ BUY upgrade reflects confidence in execution rather than optimism on growth.