June 6, 2013 2:12:16 am
On a day when the Sensex posted marginal gains,shares of Just Dial made an impressive debut on the bourses,surging more than 15% from its issue price.
The local search engine saw its share price hit a high of R631.90 a 19% premium over its issue price of R530. But the stock pulled back from day highs to close at R605,which was R75,or 14.15%,higher. The newly-listed entity now commands a market capitalisation of R4,272 crore.
The company had launched its R950-crore initial public offering (IPO) in May when promoters and a few private equity (PE) investors of the entity decided to offer their shares to public. The IPO got a stellar response from investors and was subscribed 12 times.
Market experts,meanwhile,say that it is difficult to speculate on the future of the stock as it has no prior record of trading activity and also no clear peer group to compare valuations. Jupiter Infomedia (online yellow pages directory) and Info Edge (Naukri.com) are the only two entities that have a slightly similar business model.
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We wouldnt advise entry at these valuations. However,investors who took part in the IPO can book profits and re-enter later at better valuations. We would advise a wait-and-watch policy for at least next two quarters, says AK Prabhakar,senior vice-president (equity research),Anand Rathi Securities.
A section of the market feels that the companys high valuations are justified since there is hardly any competition in the voice search segment and Just Dial enjoys the first mover advantage. Motilal Oswal in a note observed that strong brand presence,updated and accurate database gives the search engine an edge over other internet companies.
For FY12,Just Dial reported a net profit of R52.82 crore,while the diluted EPS as of December 2012 was at R6.89.
Just Dials chief financial officer Ramkumar Krishnamachari attributed the investor interest to the sound and effective business model. We will now work towards building long-term value for our shareholders,he added.
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