Just Dial Ltd (JDL) is one of the leading local search engines providing users with information and user reviews from its database of local businesses, products and services across India.
If JDL has to grow its business organically, it has to increase demand from both its users and paid advertisers, as well as expand into new geographic markets in the country, HDFC Securities said in a note.
The company is entering the primary market on May 20, 2013 by issuing shares in the price band of Rs 470-543 per share. The company is offering 10 per cent discount on issue price to retail investors.
The listing of the equity shares will enhance its brand name and provide liquidity to existing shareholders. According to JDL, listing will also provide a public market for the equity shares in India. JDL will not receive any proceeds from the offer.
The company does have first mover advantage and along with strong brand recognition, it has attractive value propositions for SMEs.
JDL's objective is to offer free, fast, relevant, reliable and enhanced search results to its users through various communication media.
JDL has approximately 7.7 million listings and 9.1 million listings across various cities and towns as of June 30, 2012 and March 31, 2013, respectively. There is significant opportunity to further deepen its presence in its 11 largest cities.
HDFC Securities highlights fifteen concerns around Just Dial IPO which investors should study before investing:
JDL's failure to manage its growth and scalability or adapt to technological developments or industry trends could affect the performance and features of its products and services and reduce its attractiveness to users and paid advertisers.
JDL relies on telecommunications and information technology systems, networks and infrastructure to operate its business and any interruption or breakdown in such systems could impair its ability to effectively provide its products and services.
Promoters of JDL has interests in entities which are in the same line of business as that of the company. JDL's ability to expand its business outside India may be limited.
JDL's implied valuation based on its implied price / earnings multiple at the offer price may be higher than that of other global and local internet based companies.
JDL depends on its brand recognition, and failure to maintain and enhance awareness of its brand would adversely affect its ability to retain and expand its base of users and paid advertisers.
JDL may not be able to reduce its dependency on search engines to direct users to its website.
JDL demerged its IT testing operations to JD Global, which has resulted in a reduction in its capital and profit and loss account and net worth.
Business of JDL may be materially and adversely affected by its reliance on SMEs as its target paid advertisers
JDL may not be able to effectively and properly maintain, enhance and utilize its database.
Intellectual property rights are important to JDL's business, and it may be unable to protect them from being infringed by others, including its current or future competitors.
The data of JDL's users and paid advertisers may be misappropriated by its employees or subcontractors and as a result, cause it to breach its contractual obligations in relation to such confidential information.
To remain competitive, JDL has to grow its business by increasing demand by both users and paid advertisers, as well as expanding into new geographic markets in India.
Wage pressures in India may prevent JDL from sustaining its competitive advantage and may reduce its profit margins.
Some of the products or services of JDL has only recently been introduced and, as a result, it may be difficult to evaluate their performance and prospects.
JDL depends upon vendors and third party suppliers to provide it with hardware and software required for the development and provision of its products and services to its users and advertisers.
(The above report is made from inputs provided by HDFC Securities. The views and recommendations expressed in this report are brokerage firm's own and do not represent those of EconomicTimes.com)
If JDL has to grow its business organically, it has to increase demand from both its users and paid advertisers, as well as expand into new geographic markets in the country, HDFC Securities said in a note.
The company is entering the primary market on May 20, 2013 by issuing shares in the price band of Rs 470-543 per share. The company is offering 10 per cent discount on issue price to retail investors.
The listing of the equity shares will enhance its brand name and provide liquidity to existing shareholders. According to JDL, listing will also provide a public market for the equity shares in India. JDL will not receive any proceeds from the offer.
The company does have first mover advantage and along with strong brand recognition, it has attractive value propositions for SMEs.
JDL's objective is to offer free, fast, relevant, reliable and enhanced search results to its users through various communication media.
JDL has approximately 7.7 million listings and 9.1 million listings across various cities and towns as of June 30, 2012 and March 31, 2013, respectively. There is significant opportunity to further deepen its presence in its 11 largest cities.
HDFC Securities highlights fifteen concerns around Just Dial IPO which investors should study before investing:
JDL's failure to manage its growth and scalability or adapt to technological developments or industry trends could affect the performance and features of its products and services and reduce its attractiveness to users and paid advertisers.
JDL relies on telecommunications and information technology systems, networks and infrastructure to operate its business and any interruption or breakdown in such systems could impair its ability to effectively provide its products and services.
Promoters of JDL has interests in entities which are in the same line of business as that of the company. JDL's ability to expand its business outside India may be limited.
JDL's implied valuation based on its implied price / earnings multiple at the offer price may be higher than that of other global and local internet based companies.
JDL depends on its brand recognition, and failure to maintain and enhance awareness of its brand would adversely affect its ability to retain and expand its base of users and paid advertisers.
JDL may not be able to reduce its dependency on search engines to direct users to its website.
JDL demerged its IT testing operations to JD Global, which has resulted in a reduction in its capital and profit and loss account and net worth.
Business of JDL may be materially and adversely affected by its reliance on SMEs as its target paid advertisers
JDL may not be able to effectively and properly maintain, enhance and utilize its database.
Intellectual property rights are important to JDL's business, and it may be unable to protect them from being infringed by others, including its current or future competitors.
The data of JDL's users and paid advertisers may be misappropriated by its employees or subcontractors and as a result, cause it to breach its contractual obligations in relation to such confidential information.
To remain competitive, JDL has to grow its business by increasing demand by both users and paid advertisers, as well as expanding into new geographic markets in India.
Wage pressures in India may prevent JDL from sustaining its competitive advantage and may reduce its profit margins.
Some of the products or services of JDL has only recently been introduced and, as a result, it may be difficult to evaluate their performance and prospects.
JDL depends upon vendors and third party suppliers to provide it with hardware and software required for the development and provision of its products and services to its users and advertisers.
(The above report is made from inputs provided by HDFC Securities. The views and recommendations expressed in this report are brokerage firm's own and do not represent those of EconomicTimes.com)
