Just Dial received a positive rating upgrade from ICICI Securities following its third quarter results, which demonstrated improved operational efficiency and margin expansion despite modest revenue growth.

Q3 Financial Performance

The company delivered steady financial performance in the third quarter with notable improvements in profitability metrics:

The 6.4% year-on-year revenue growth reflects the company's ability to maintain business momentum in the competitive digital services market. More significantly, the Ebitda margin expanded by 102 basis points compared to the same quarter last year, indicating improved operational efficiency.

Cost Optimization Strategy

The margin expansion was primarily driven by reduced employee costs following strategic headcount reductions implemented in the second quarter. This cost optimization initiative has begun showing positive results in the company's profitability metrics, demonstrating management's focus on operational efficiency.

The headcount reduction strategy appears to be yielding the intended results without significantly impacting revenue generation capabilities, suggesting effective workforce optimization rather than across-the-board cuts.

ICICI Securities Upgrade

ICICI Securities upgraded Just Dial shares to 'Buy' rating based on the improved financial metrics and operational performance demonstrated in the quarterly results. The brokerage's positive assessment reflects confidence in the company's strategic direction and execution capabilities.

The upgrade comes as the company shows signs of balancing growth with profitability, a key concern for investors in the digital services sector. The improved margins while maintaining revenue growth trajectory indicates a more sustainable business model.

Market Implications

The rating upgrade and positive quarterly results position Just Dial favorably in the e-commerce and digital services space. The company's ability to expand margins through operational efficiency while sustaining revenue growth demonstrates management's capability to navigate market challenges effectively.

Investors will likely monitor whether the company can maintain this improved profitability trend while continuing to invest in growth initiatives and market expansion.

ICICI Lombard General Insurance shares fell as much as 4% in Wednesday trading despite reporting healthy topline growth, as deteriorating underwriting performance and operational challenges weighed on investor sentiment. The insurer's Q3 results showed mixed performance with strong premium growth overshadowed by widening underwriting losses and multiple one-off impacts.

Financial Performance Overview

The company's Q3 performance highlighted the contrast between robust business growth and profitability pressures:

Underwriting Challenges Intensify

The company's underwriting performance deteriorated meaningfully during the quarter, with the combined ratio worsening to around 104.5% from about 102.7% in the previous year. Underwriting losses widened sharply, driven by an increase in loss ratios across key business lines. The combined ratio above 100% indicates that the company paid out more in claims and expenses than it collected in premiums, highlighting operational headwinds.

Brokerage Views and Outlook

HSBC, maintaining a 'Buy' rating with a price target of ₹2,285, attributed the Q3 profit miss to increased loss ratios and one-off impacts from higher wage costs. The brokerage has cut its FY26 earnings estimates and adjusted FY27-FY28 forecasts to account for the performance miss.

Segment-wise Performance Highlights

CLSA noted that earnings were partly impacted by one-off labour code charges, while underlying growth trends showed gradual improvement. Retail health insurance emerged as the standout segment, posting over 80% growth driven by GST removal benefits and strong traction for the Elevate product. Commercial lines delivered steady performance, while motor insurance growth improved despite competitive intensity continuing to limit profitability. Management indicated readiness to welcome any regulatory decision on commission structures by insurance regulator IRDAI.