Reliance-backed Justdial reported a 9.7% fall in second-quarter net profit to ₹107.8 crore, even as operating revenue rose 13.1% to ₹342.8 crore. Other income dropped 25.6% because of bond yield movements, expenses rose 15% with a third of the extra spending going to AI and B2B expansion, and EBITDA margin narrowed to 26.4%.
<p>Justdial, the local search and business listings company controlled by Reliance Retail, reported a decline in quarterly profit on October 19 even as its core business continued to grow, highlighting the impact of volatile bond markets on companies with large cash reserves and the rising cost of investing in artificial intelligence.</p><p>Net profit for the July-to-September quarter fell 9.7% year on year to ₹107.8 crore from ₹119.4 crore, according to figures reported by Inc42. Compared with the previous quarter's ₹166.2 crore, profit was down 35.1%.</p><p>Operating revenue, however, rose 13.1% year on year to ₹342.8 crore and 4.7% from the previous quarter. Including other income, total revenue was ₹397.4 crore. Justdial's shares closed 2.82% higher at ₹732.55 on the day the results were reported.</p><h2>The bond market effect</h2><p>The main reason for the profit decline was a sharp fall in other income, which consists largely of returns on the company's investments. Other income fell 25.6% year on year and 58.5% from the previous quarter to ₹54.6 crore. The company attributed the sequential drop to movements in bond yields.</p><p>Justdial holds substantial cash and treasury investments, much of it in debt instruments. When bond yields rise, the market value of existing bonds falls, reducing the gains, or creating losses, on those holdings. Bond yields in India and globally have risen sharply in 2026 amid persistent inflation, rate increases by central banks and concerns about government borrowing. Banks and other companies with large bond portfolios, including Axis Bank and Punjab National Bank, have also cited weaker treasury income this results season.</p><p>For Justdial, other income has historically been a significant contributor to profit, so its decline has an outsized effect on the bottom line.</p><img src="/api/files/1792484333434-7feda4b8ed7390f4d2c8fec3.webp" alt="263d60c8-13b0-4b63-a6c4-10d980225cfa.png"><h2>Spending on AI and B2B</h2><p>Costs also rose faster than revenue. Total expenses increased 15% year on year to ₹262.8 crore. The company said about one-third of its incremental spending went towards artificial intelligence, automation and expansion of its business-to-business offerings.</p><p>As a result, operating EBITDA rose just 4.1% to ₹90.7 crore from ₹87.1 crore, and the EBITDA margin narrowed by 228 basis points to 26.4% from 28.7% a year earlier.</p><p>Justdial's investment in AI reflects pressure across the internet industry. Search behaviour is changing as consumers increasingly turn to AI assistants and chatbots for answers, rather than traditional search engines and directories. For a company built on helping people find local businesses, adapting to AI-driven discovery is essential. AI can also help Justdial automate customer service, improve the accuracy of its listings and offer better tools to the small businesses that advertise on its platform.</p><p>Its B2B marketplace, JD Mart, aims to connect manufacturers, wholesalers and buyers, competing with platforms such as IndiaMART. Expanding in B2B offers a route to growth beyond consumer local search.</p><h2>Traffic and listings</h2><p>Justdial's user base was broadly stable. Unique visitors rose 0.4% year on year and 2.8% from the previous quarter to 19.84 crore. Mobile accounted for 16.89 crore visitors, or 85.1% of traffic, down 2.1% year on year. Desktop traffic rose 24.7% to 2.45 crore, while voice traffic, from users calling Justdial's helpline, fell 9.2% to about 50 lakh.</p><p>Total app downloads rose 7.8% to 4.49 crore, but average daily downloads fell 21.9% to 6,363, suggesting slower new user acquisition through the app.</p><p>On the supply side, active business listings grew 12.2% to 5.74 crore. Net listing additions in the quarter were 13.1 lakh, down from 15.2 lakh a year earlier. Paid campaigns, the number of businesses paying to advertise on Justdial, rose 5.2% year on year and 2.7% from the previous quarter to 6.57 lakh.</p><h2>A business built on India's small enterprises</h2><p>Justdial's customers are mostly small and medium-sized businesses, from plumbers, electricians and tutors to restaurants, clinics and shops. For many of these businesses, a Justdial listing has been a key way to attract customers since the company began as a phone-based directory service in the 1990s.</p><p>The growth in paid campaigns indicates that small businesses continue to see value in advertising on the platform, even as competition for their marketing budgets has intensified from Google, Meta's platforms, food delivery and e-commerce apps, and specialised marketplaces.</p><p>Reliance Retail acquired a controlling stake in Justdial in 2021, giving the company the backing of one of India's largest conglomerates. Integration with Reliance's broader digital ecosystem, including JioMart and other platforms, has been part of the strategic rationale.</p><h2>What investors will watch</h2><p>Analysts will focus on whether Justdial's investments in AI and B2B translate into faster revenue growth and improved monetisation. The narrowing margin will be acceptable to investors only if it leads to stronger growth in future quarters.</p><p>The volatility of other income is another factor. If bond yields stabilise or fall, the company's treasury income could recover, boosting profits. If yields continue to rise, other income could remain under pressure.</p><p>Traffic trends will also be important. Stable visitor numbers suggest Justdial retains a loyal user base, but growth has been modest, and the company must find ways to attract new users as search habits evolve.</p><h2>The competitive landscape</h2><p>Justdial competes for small businesses' attention and advertising budgets with a wide range of platforms. Google's search and maps services dominate local discovery for many users, while Meta's WhatsApp, Instagram and Facebook have become important channels for small businesses to reach customers. Vertical platforms in food delivery, home services, healthcare and e-commerce have also captured specific categories of local demand.</p><p>Against that backdrop, Justdial's strengths lie in its long-established brand, its vast database of business listings, particularly in smaller cities, and its relationships with millions of small enterprises. Its challenge is to remain relevant as consumers adopt new ways of searching, including through AI assistants that can answer questions directly rather than pointing users to directories.</p><h2>The outlook</h2><p>Justdial's second-quarter results show a company whose core operations remain healthy, with double-digit revenue growth, rising listings and more paying advertisers, but whose profits have been squeezed by factors largely outside its control and by deliberate investment in the future.</p><p>For a business that has survived several waves of internet disruption, from the rise of search engines to the shift to mobile, the AI transition may be the most significant yet. How well Justdial navigates it will determine whether it remains a go-to destination for India's small businesses and their customers in the years ahead.</p>
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