Share undervalued, buy-back at Rs 1,550 apiece; no fund-raising for 6-12 months: VSS Mani, Just Dial

Just Dial rallied nearly 9 per cent in trade after the company said that it would buy-back up to 25% of its aggregate of paid-up capital and free reserves at a maximum price Rs. 1,550 per equity share.

The stock ended the day flat, up 0.18 per cent orRs 2 at Rs 1111.7.

In a chat with ET Now, VSS Mani, Founder and CEO of Just Dial, talks about latest announcements around the company's buy-back plan. Excepts:

ET Now: What was the thought behind cancelling the fund-raising plan and going ahead with the buy-back plan? Are they not contradictory in nature?

VSS Mani: There was just board enablement to raise money. We were considering certain M&A opportunities at that time. But we did not find them good enough. There is no significant property to buy right now. It would take another couple of years for things to settle down. There would be much more buying opportunities. We had enough cash in our bank and decided to take at least 170 crores of our reserves and utilise it for a buy-back, which should be on a proportionate basis. Approximately 2% of the company will be bought back.

ET Now: What would be the quantum of the buy-back and the pricing?

VSS Mani: It would be priced at Rs 1,550 and the amount would be about Rs 170 crores.

ET Now: So for the next 12 months, there won't be any kind of fund-raising by Just Dial? You would, if opportunity presents itself, go ahead with internal accruals and debt?

VSS Mani: No, not debt. But internal accruals, yes.

ET Now: But going into a buy-back would technically rule out any fund raising for the next 6 to 12 months. Is that right?

VSS Mani: Yes, you are absolutely right.

ET Now: Are you planning to start buying immediately? The stock is certainly below 1550, which would mean the promoters of the company officially can buy?

VSS Mani: I do not want to comment on that. I don't look at my stock price even on a daily basis. We are just busy with our work and buy-back would happen as and when we get regulatory approvals.

ET Now: How soon could that be?

VSS Mani: Can't comment on that either. We need some kind of approval which could perhaps take 2-3 months.

ET Now: Considering that you are looking at a buy-back, which could be at a substantial price from the existing market price, it seems that promoters feel the stock may be very cheap. What do you say?

VSS Mani: Yes, you're right, especially when you think that here is a company, which is on the internet space and is growing very well and is highly profitable as well. Then there are others which have negative cash flows and are in the private space, at incredibly high valuation.