Growth hard to come by for Justdial
Justdial, an online database listing company that raised Rs 950 crore when it sold shares for the first time in May 2013, is now trading below its listing price.
After making a high of Rs 1,800 in mid-2014, Justdial’s stock has declined steadily due to consistently weak results and high valuations. On Monday, the stock fell 6.8% to close at Rs 566.60 on the NSE. The shares dropped 7% to Rs 565.90 on the BSE.
During the initial public offering, which was subscribed 12 times, the shares had been sold to institutional investors at Rs 530 each. On June 5, 2013, the first day of trading, the shares opened at Rs 590 and closed at Rs 611.45 on the BSE.
Given the weak outlook for the company, investors may want to exit, analysts said.
Justdial’s net profit dropped 16% to Rs 27 crore in the September-December quarter from a year earlier, missing estimates. Net sales climbed 11% — against expectations of 17-18% — to Rs 171.3 crore. Operationally, the company continues to struggle in its core business of database listing. In a call with analysts, the management said it is facing a slowdown in paid listings.
Although the management has projected 25% growth in FY17, analysts are not so certain. “In a competitive industry, time-tomarket and execution are critical.
JD’s magnitude of slippage in both new initiatives (Search Plus) and core listings has left us disappointed,” said Kawaljeet Saluja, an analyst with Kotak Securities.
At the current market price of Rs 566.60, the stock is trading at 23 times FY16 earnings, which appears quite expensive in an environment of shrinking earnings.