Just Dial: tender shares in buyback, analysts advise investors

Priya Kansara Mumbai | Updated on January 20, 2018

just dial


Long term investors can hold on to the stock

Analysts advise short term investors, who were stuck in the current downfall of the Just Dial’s stock price, to tender shares in the ongoing buyback of 1.06 million shares at Rs 1,550. The stock hit an all time low level at Rs 375.7 on February 12. Today closed at Rs 555, up 3.73 per cent on the National Stock Exchange. The buyback will close on March 10.

“One can tender shares in the buyback scheme of the company and then buy the shares from the secondary market as the divergence of the buyback price from the current market price is still huge,” said one analyst who did not wish to be quoted.

Goldman Sachs upgraded the stock to neutral as it believes that there is limited downside to the stock price after the correction and concerns around slowing growth and execution are largely priced in.

The company has sufficient cash reserves and investments of Rs 878 crore—23 per cent of market capitalisation--to fund the Rs 164.5 crore buyback.

Only long term investors are advised to hold on to the stock as the prospects of the company looks better with recent launch of two products but things will take time to improve. Hence analysts are cautiously optimistic about the business prospects. Foreign brokerages like Deutsche Bank and Goldman Sachs are more positive than domestic ones like Edelweiss.

The company has launched Search Plus app and Omni services. The Search Plus app will enhance customers’ user experience across categories, enable fulfillment and Omni services will allow small & medium enterprises to go digital.

Edelweiss is enthused with the product launches but estimates the company to spend significant amount on advertising in order to acclimatise customers with the above services and users about the app features. The company told analysts that it is confident of 20-25 per cent revenue growth in FY17 due to products launches and ramping up its sales force by 20-25 per cent in 2016.

Deutsche Bank, which retains buy rating on the stock with a target price of Rs 900, expects the company to deliver a 51 per cent earnings CAGR over FY16-18.

Published on February 26, 2016

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