Thursday, August 4, 2016

JUST DIAL FALLS BELOW IPO PRICE, FIRST CHOICE IPO IS RIGHT AGAIN

Just Dial came IPO at Rs 530 a share in 2013. FirstChoiceIPO had recommended to stay away from the IPO since it was irrationally priced.

This is what we wrote, in 2013, on the IPO:

At Rs 470-573, the IPO is irrationally priced in spite of 10% discount offered to retail investors. The company has equity of Rs 69.44Cr. There won’t be any increase in equity post IPO since this is an OFS by existing shareholders.  The offer is made in excess of 50 PE, based on FY 13 figures. And for FY 14 too, the company may post an EPS around Rs 10. The IPO pricing is madness. CITI and Morgan Stanley had fooled the investors in the past with IPOs like SKS Micro and Jay pee Infra. Do not get fooled by the grading given by CRISIL. Grading and pricing are entirely different matters. The IPO should not have priced beyond Rs 150. This is one more hyped and loot maar category IPO like, SKS Micro and A2Z Maintenance.  

AVOID THE IPO.

 This is what we wrote on the grading:

JUST DIAL IPO : QUESTIONABLE GRADE BY CRISIL


Just Dial IPO has been awarded grade 5 by CRISIL. Normally this grade is awarded to companies which are professionally managed, have impeccable track record and who have high business integrity & ethics.  However a closer scrutiny of the RHP of Just Dial tells a different story.   Among others, we found the following deficiencies / un-professionalism in conduct of the business:

               1. Improper keeping of records.                   
2. There were delay in a few cases in the deposit of undisputed statutory dues; and no payments were made to the Employees’ State Insurance Corporation, for which the company had been served show cause notice by ESIC.

3. The company had received FEMA violation notices.

4. There are outstanding criminal proceedings against the Company,  Managing Director and certain Directors and employees.

5.  Promoters have interests in entities which are in the same line of business as that of the Company.

One does not understand how CRISIL has awarded grade 5 for the IPO inspite of the above deficiencies / unprofessional conduct of the business.


The stock is now trading around Rs 480 and most brokerages are now giving a sell call on the stock.

3 comments:

  1. I disagree with you. Just dial launched their IPO in 2013 and now we stand in 2016 and in between share went up to Rs.1800 level hence it is not fair to say your prediction became right.

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  2. This is what we call selective reporting Jinto, no where Prasanna mentions the high the stock touched in these three years!!

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  3. The fact remains that the IPO was irrationally priced. It took more than 2 years for market to understand its true value.

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