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    Just Dial IPO: Should you subscribe?

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     Just Dial IPO: Should you subscribe?
    The Indian telephonic search giant is sizzling to go ahead with its Rs 950 Cr. IPO offer opening on 20th May 2013 and ending on 22nd May 2013. After a long drought in the IPO market, this issue is expected to bring in some charm back into the primary market.

    Should You Apply?

     

    Investors can look forward to apply for this IPO in a positive note. Following are the reasons that make IPO outlook to be positive for investment:

    Strong Market Presence

    Just Dial services are available all around with ease of free inquiry and it has laid down a strong presence in the voice search domain. It had started the telephonic search for the first time in the country and therefore it also takes advantage of being the first mover in this business segment.

    Big Expansion Plan

    The company plans to venture into new geographical areas and expand its business reach. The experience and strength supports the plan well.

    Phenomenal Valuation

    Just dial earns most of its revenue from the paid advertisers. It receives most of the fees in advance, therefore the working capital cycle is almost negative. The company's balance sheet looks more attractive due to a debt free and cash rich position. The company is diluting a part of its equity and it can  further take use of the debt instrument to leverage its financial position for further expansion in the future.
    Apart  from the positive side, there are a few negative notes for Just dial IPO. The company's maximum business comes through google search engine. At present, google is not operating in telephonic search business, but in future if it plans to step into such services, then it can create a threat to Just Dial business. The appropriate use of fund is important, but business diversification is also required to reduce the risks.

    Finally

     

    Looking at the niche business, good valuation and big expansion plan of Just Dial, investors can take take a chance to apply for this IPO, the probability of shares being allocated will improve if multiple applications are used i.e. through the Demat of relatives, spouse etc.

    About the Author:

    Amit Sethi is an MBA (Fin) graduate and a Financial Consultant. He has spent over 10 years in Equity research, Stock broking and Financial Consultancy Sector. He can be reached at expert@investmentyogi.com

    Courtesy:investmentyogi

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