What’s Good About Justdial IPO

• First movers advantage
• Strong business model and leading local search engine in India
• High website traffic: In fiscal 2011, Justdial addressed over 180 million search queries from millions of users across
  platforms. As of June 30, 2011, the company was conducting approximately 139,500 campaigns for our paid advertisers.
• The company have a large database of approximately 6.0 million listings as of June 30, 2011.
• Strong financial growth: The company’s consolidated total income increased from Rs. 502.4 million in fiscal 2007 to Rs. 1,899.1 million in fiscal 2011,representing a CAGR of 39.4%. Its consolidated total income increased in fiscal 2011 by 40.9% over fiscal 2010 and consolidated restated profits after tax increased from Rs. 16.4 million in fiscal 2007 to 286.2 million in fiscal
  2011, representing a CAGR of 104.3%. Its consolidated restated profits after tax increased in fiscal 2011 by 55.3% over fiscal 2010.
• Strong cash flow from operations in addition to low capital expenditure needs.
• Strong fundamentals: IPO Grade 5 / 5 by CRISIL
• The IPO has safety net scheme (read below for more details)

What bad about Justdial IPO

• Promoters of Justdial has interests in entities which are in the same line of business as that of the company.
• The internet industry in extremely volatile. Hence, the equity valuation should be discounted to factor-in the volatility. Considering this the valuation seems pretty high.
• Low barrier to entry

Safety Net Scheme

The Safety Net Scheme will operate for a period of 180 days beginning from the date of listing and commencement of trading of the Equity Shares on the Stock Exchanges. The Safety Net shall be triggered, on the completion of the Safety Net Period, if the Safety Net Trigger Price is lower than the price at which the Equity Shares were allotted to the Retail Individual Allottees in the Offer. On the occurrence of the Safety Net Trigger, the Safety Net Providers will make an invitation to the Eligible Allottees to offer to sell the Equity Shares Allotted to them in the Offer, which continue to be held since the initial allotment in the Offer, as determined on the basis of the LIFO Method to the Safety Net Providers at the Retail Offer Price.

Please note that scheme protects IPO investors who have initially invested less than Rs. 50,000/- This means that you should apply for maximum of 100 shares (4 lots) at lower price band or 75 shares (3 lots) at higher price band to take advantage of the scheme.

Recommendation by Brokers

• Aditya Birla Money: Avoid
• GEPL Capital: Subscribe
• Edelweiss: Great business, fair valuations; Apply in retail category
• Emkay: Subscribe for 15% upside
• Hindu Business Line: Avoid

Share your views in the comments below.

The cumulative gross exposure through equity, debt and derivative positions shall not exceed 100% of the net assets of the scheme.

The tenure of the scheme is 1825 days (5 Years) from the date of allotment.

Download Application Form / KYC Form

Scheme Details: 

• New Fund Opens: 17-May-2013
• New Fund Closes: 31-May-2013
• Scheme Type: Close Ended
• Scheme Category: Income
• Entry Load: Not Applicable
• Exit Load: Being a listed Scheme, no exit load will be applicable. Investors shall note that the brokerage on sales of the units of the Schemes on the stock exchanges shall be borne by the investors.
• Offer Price: Rs. 10/-
• Minimum Subscription: Rs 5,000/- and in multiples of Rs.1/- thereafter

The securities would mature on or before the maturity of the Plan under the scheme.

Download Application Form / KYC Form

Scheme Details:  

• New Fund Opens: 17-May-2013
• New Fund Closes: 31-May-2013
• Scheme Type: Close Ended
• Scheme Category: Income
• Entry Load: Nil
• Exit Load: Nil
• Offer Price: Rs. 10/-
• Minimum Subscription: Rs 5,000/- and in multiples of Rs.1/- thereafter

Justdial has set up a unique No as their operator assisted hotline number, across India, which is accessible 24 / 7 , with a database of approximately 9.1 million listings as of March 31, 2013. The company having registered & corporate office in Mumbai, and has offices across India in Ahmedabad, Bengaluru, Chandigarh, Chennai, Coimbatore, Delhi, Hyderabad, Jaipur, Kolkata and Pune.

Check Justdial IPO Review

The company is giving 10% discount on floor price to retail investor. One can deduct Rs 47/- per share while applying as retail investor.

Issue Detail:

• Issue Open: May 20, 2013  
• Issue Closes: May 22, 2013
• Issue Size: 17,497,458 Equity Shares of Rs. 10
• Issue Type: 100% Book Built Issue IPO
• Issue Size: Rs. 822 – 950 Crore approximately on lower & upper Band
• Face Value: Rs. 10 Per Equity Share
• Issue Price: Rs. 470 – Rs. 543 Per Equity Share
• Market Lot: 25 Shares and in multiple of 25 Shares thereafter
• Listing At: BSE, NSE, MCX-SX
• IPO Grading: Crisil has assigned 5/5 to the issue

The scheme shall not invest in Central and State Government Securities. The cumulative gross exposure through equity, debt and derivative positions shall not exceed 100% of the net assets of the scheme.

Download Application Form / KYC Form

Scheme Details:    

• New Fund Opens: 08-May-2013
• New Fund Closes: 22-May-2013
• Scheme Type: Close Ended
• Scheme Category: Income
• Entry Load: Not Applicable
• Exit Load: Being a listed Scheme, no exit load will be applicable. Investors shall note that the brokerage on sales of the units of the Schemes on the stock exchanges shall be borne by the investors.
• Offer Price: Rs. 10/-
• Minimum Subscription: Rs 5,000/- and in multiples of Rs.10/- thereafter

The scheme shall not invest in Central and State Government Securities.

The cumulative gross exposure through equity, debt and derivative positions shall not exceed 100% of the net assets of the scheme.

Download Application Form / KYC Form

Scheme Details:      

• New Fund Opens: 02-May-2013
• New Fund Closes: 16-May-2013
• Scheme Type: Close Ended
• Tenure of Scheme: 1100 Days from date of allotment
• Scheme Category: Income
• Entry Load: Not Applicable
• Exit Load: Being a listed Scheme, no exit load will be applicable. Investors shall note that the brokerage on sales of the units of the Schemes on the stock exchanges shall be borne by the investors.
• Offer Price: Rs. 10/-
• Minimum Subscription: Rs 5,000/-

However, AMC is not assuring or giving guarantee that the investment objective of the Scheme would be achieved.

Download Application Form / KYC Form

Details of the Issue:

• Fund Opens: 22-Apr-2013
• Fund Closes: 06-May-2013
• Scheme Type: Open Ended
• Scheme Category: Growth
• Load: Nil
• Offer Price: Rs. 10/- per unit
• Minimum Subscription: Rs. 10000/-

Scotts Garments is mainly engaged in producing woven, knitted & denim garments. It has 15 factories and state of the art textile mills based in Karnataka and Tamilnadu.

The company plans to use the proceeds for setting up of trouser manufacturing unit at Doddaballapur, Karnataka and knitting & fabric processing unit at Kagal – Kolhapur. Further for margin money for working capital of new units; and general corporate purposes.

Details of the Issue:  

• Issue Period: 25-April-2013
• Issue Closes: 29-April-2013
• Issue Size: Public Issue of 1,05,06,954 Equity Shares
• Issue Type: 100% Book Building
• Issue Price: Rs 130 to Rs 132
• Face Value: 10/- per share
• Market Lot: 100 Equity Shares of 100 shares thereafter
• Listing: BSE & NSE
• IPO Grading: CARE has rated the IPO Grade 3 out of 5

Download Application Form

It is a work of equity research analysts to issue reports containing their view on how company’s results would be in the upcoming results announcement. Those analysts who are tracking Infosys Limited (I’ll refer  to them as ‘Analysts’ from here onwards) almost always get it wrong when it comes to their prediction. This is happening more often lately. Lets check how Analysts have fared in last two results announcements made by the company.

Q3 FY2013 Results

On 11 January 2013, Infy was to declare its Q3 results. The price of Infy’s stock was looming around Rs 2,350/- per share. Infy’s previous few quarters had been very disappointing. So, brokers were expecting a similar bad quarter. See the following recommendations made by the Analysts before results were out.

•  Infosys may slip to Rs 1975-2000, says Baliga
•  Infy Q3 results unlikely to be strong; but good buy: Tandon
•  Buy Infosys, says Sudarshan Sukhani
•  Infosys may slip to Rs 2100: Anil Manghnani (date: 09 Jan)
•   Bull’s eye: Buy TVS Motor, Suzlon, CMC, short Infosys (result day morning)

As you can see, most of the brokers expected the bad result run to continue and stock price to take the deep dive. Then the results announced and it surprised the whole market as results were better than expected. The stock price zoomed (check graph below)

Astonished, the Analysts immediately took the u-turn and now Infosys seems like a golden investment opportunity to them. Now their recommendations were suggesting that the approx 16% rise in one day is sustainable. Following are the post Q3 results call made by the analysts.

•  See 10% upside in Infosys: Rajen Shah
•  Infosys has target of Rs 2850: Aniruddha Mehta
•  Infosys has target of Rs 3200: JM Financial
•  Infosys may rally to Rs 2950: Mohindar
•  See Infosys rising closer to Rs 2,900: Manghnani (the same person predicted Infy falling to Rs. 2,100 just 2 days back)

The analysts took the complete flip-flop and now almost all the research reports included the phrase – ‘worst is behind!’. The phrase was seemingly used to cover the fact that they have gone wrong with their prediction.

Q4 / Annual Results 2013

Going ahead with the ‘worst is behind’ notion, this time almost all the analysts expected the bonanza results from Infosys. Following calls were made before the Q4/Annual Results announcement:

•  Infosys can move to Rs 2980-3000, says Sukhani
•  Infosys may gain 10% in 3-4 months: PN Vijay
•  Buy Infosys Calls: Sukhani
•  Infosys has target of Rs 2950: Jitendra Panda
•  Infosys has strong support around Rs 2700: Sukhani

The stage was set for the fantastic results to follow but when the results were announced on 12th April 2013, the analysts were caught on the wrong foot! The results were bad but the guidance for revenue growth in FY14 was disastrous. The dollar revenue guidance of 6%-10% given by Infosys was below the IT industry guidance. NASSCOM had forecasted a 12-14 percent growth in the Indian IT industry during 2013-14 against 10.2 percent in dollar terms the previous year.

As a result, the stock went down as much as 22% in a single day, which is equivalent to over Rs. 35,000 crores of market capital. Remember, the worst is behind?

Now , as you must have guessed, all the brokers are have gone bearish once again. ‘Buy’ calls have vanished in a matter of days and ‘Sell’ calls are ruling the illusionary world of equity research analysts. Such incidents are not one-off and proves two things:

1. Most of the equity research analysts (atleast those covering Indian companies) fail to properly analyze change in company’s fundamentals. Any change in trend almost always catches them in wrong foot.
2. Analysts are afraid of going against the market sentiments and results consensus. After all, it is better to be proved wrong along with other analysts than to be all alone in case the consensus turns out to be true.

So, next time analysts give out calls on how to trade stock ahead of Infosys’ results announcement, you know what to do. Ignore them!

Note: All calls are sourced from MoneyControl.com and graph from Google Finance