The Indian telephonic search giant is sizzling to go ahead with its Rs 950 crore initial public offer (IPO) from May 20, 2013 to May 22, 2013. After a long draught in the IPO market, the issue is expected to bring in some charm back into the primary market.
Here's a bit about the search giant's operations:
Issue: Public offer of 17,497,458 equity shares of Rs. 10 each, being made through 100% book-building process.
Price band: Rs 470 - Rs 543
Bid lot: 25 equity shares
Discount: 10 per cent discount to retail investors
Issue size: Rs 950.11 crore approximately
Safety net arrangement: A safety net to the resident in India in accordance with the Sebi regulations and as set out in the 'Safety Net Arrangement' section on page 372 of RHP.
Registrar: Karvy Computershare Private Ltd
Book running lead manager: Citigroup Global Markets India Pvt Ltd; Morgan Stanley India Company Pvt Ltd
Listing: Proposed to be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Issue break-up: Total 17,497,458 equity shares
QIB: 75 per cent of net issue size
HNI: 15 per cent of net issue size
Retail: 10 per cent of net issue size
IPO grading: Grade 5/5 by CRISIL. (Grade 5 indicates strong fundamentals whereas Grade 1 indicates poor fundamentals)
Just Dial is operating in telephonic search services and has approximately 9 million business listings across the county. It provides services through the internet, voice channel (mobile and telephone) and mobile-internet platforms.
It is operating in a distinctive domain with very less competition.
Why should one apply?
Here are a few reasons that make outlook on this IPO a positive for investment:
Market presence: Just Dial services are available throughout India with ease of free inquiry. Also, the company has laid down a strong presence in the voice search domain. It started the telephonic search for the first time in the country and therefore takes advantage of being the first mover in this segment.
Expansion plans: The company plans to venture into new geographical areas and expand its business reach.
Phenomenal Valuation: Just dial earns most of its revenue from paid advertisers. It receives most of the fees in advance, therefore the working capital cycle is almost negative. The company's balance sheet looks attractive due to a debt-free, cash-rich position. Just Dial is diluting a part of its equity and can further make use of the debt instrument to leverage its financial position for further expansion in the future.
Apart from the positive points, also are there a few negative notes for Just Dial's IPO. The company's maximum business comes through internet search giant Google. At present, Google is not operating in the telephonic search business, but if it plans to step into such services in future, it can create a threat to Just Dial's business. The appropriate use of funds is important, but business diversification is also required to reduce such risks.
Looking at Just Dial's niche business, good valuation and big expansion plan, investors can take a chance to apply for this IPO, the probability of shares being allocated will improve if multiple applications are used, for example, by the use of the demat of relatives, spouse and so on.
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