Just Dial shares fell 6% after reporting a 9.7% decline in Q2 profit to ₹107.8 crore. While revenue grew by 13.1%, increased spending on AI and platform upgrades squeezed profit margins, causing investor concern about near-term profitability.
Just Dial shares dropped more than 6% on Wednesday after the company reported lower profits for the second quarter of the 2026-27 financial year. While the business grew its revenue, rising expenses meant it took home less profit than the same period last year.
The company, which is a subsidiary of Reliance Retail Ventures, reported a consolidated net profit of ₹107.8 crore for the September quarter. This is a decline of 9.7% from the ₹119.44 crore it reported a year ago.
While profits fell, revenue from operations increased to ₹342.82 crore, up 13.1% from last year's ₹303.07 crore. Management stated that this revenue boost came from higher payments per campaign and an increase in the total number of paid campaigns on its platform.
However, investors reacted negatively to the pressure on profit margins. The operating profit margin, or EBITDA margin, dropped by 228 basis points to 26.4%. This indicates that the company's costs are currently growing at a faster rate than its revenue.
Management explained that these higher costs are largely due to strategic spending on platform enhancements, specifically investments in Artificial Intelligence (AI) and infrastructure for its B2B services. Essentially, the company is spending more money now in an attempt to modernize its platform and improve long-term scalability. The main challenge for investors is determining whether these costs are temporary or if they will continue to restrict profit margins in the coming quarters.
Since its acquisition by the Reliance group, Just Dial has been undergoing a transition, focusing more on B2B digital solutions. Investors are currently monitoring whether this strategy will result in higher returns or if the heavy reinvestment will continue to impact cash flow and bottom-line growth.
From a market perspective, the stock has recently faced resistance near the ₹790–800 levels. Technical analysts suggest that maintaining support in the ₹630–640 range is crucial to prevent further selling pressure. The key for investors going forward will be to track the company's ability to balance its expansion costs with actual profit growth in future quarterly results.