Just Dial cools down after rallying nearly 9% on buy-back plans

NEW DELHI: Just Dial Ltd surged as much as 8.8 per cent in trade on the BSE, after the company said that it would buy-back up to 25% of the aggregate of paid-up capital and free reserves of the Company at a maximum price Rs. 1,550 per Equity Share.

However, the buy-back is subject to the approval of the shareholders of the Company and approvals of statutory, regulatory or governmental authorities as may be required under applicable law.

On Thursday, the company shelved plans to raise Rs 1000 crore. Just Dial said in October that it was looking to raise capital to explore acquisitions to start an ecommerce business.

Just Dial's share price has fallen significantly from the Rs 1,700 levels when the fund-raising plan was announced in October, and a buyback could help shore it up.

Analysts on the Dalal Street are not too convinced about the buy-back plan. "If we look at the way the buyback has been positioned, it is not a great deal," says Mayuresh Joshi, Fund Manager, Angel Broking.

"It (Just Dial) does not have sufficient ammunition if one is perceiving that the buyback is part of the overall equity capital, so in that sense itself even at the price of 1550 it would be trading around 55 odd times FY17 earnings," he adds.

Lot of their earnings estimates going forward would be dependent on how 'search plus' actually performs and those earnings will start coming through from FY17. Joshi is of the view that we might see a technical tick up but again one really needs to look at valuations and earnings which will only see an uptick FY17 onwards.