Just Dial Rebound Continues, Shares Surge 3.5%

Shares of internet search provider Just Dial have continued their strong run since hitting a 52-week low of Rs 741 on November 9. Just Dial on Tuesday rose as much as 3.5 per cent at its day's high of Rs 933.

This extends its gains to 21 per cent in 11 sessions, significantly outperforming the markets. The latest trigger for the stock's surge has been the announcement of a buyback offer. Just Dial has approved December 4 as the record date for the buyback of equity shares, the company informed the BSE.

Under the buyback offer, Just Dial has proposed to buy 10,61,499 shares at a price of Rs 1,550/share on a proportionate basis aggregating up to 1.5 per cent of the equity share capital of the company, the company in a newspaper advertisement.

The buyback offer represents nearly 72 per cent premium over yesterday's closing price of Rs 901.70 on BSE and the company will spend nearly Rs 165 crore on the buyback offer.

Besides that many analysts saw the earlier correction in Just Dial shares as oversold and said that the stock was poised for a rebound. "The stock has been in an over-sold situation since last few months. It has taken support at earlier bottom," said Hemen Kapadia, senior vice president of KR Choksey Securities. He expects the stock to go up to Rs 1,050.

Despite the recent rebound, Just Dial shares are down over 40 per cent from their 52-week highs of Rs 1,631.

Disappointing quarterly earnings, combined with higher valuation, has been attributed to the weakness in the stock by analysts, who also cite increasing competition in the e-commerce space.

SV Prasad, chairman of Chime Consulting, said that company's business model straddles two very competitive space - internet search and e-commerce - where it faces giants like Google, Amazon and Flipkart.

At 12:20 p.m., shares of Just Dial were trading 2.7 per cent higher at Rs 926 as compared to a flat Nifty.