Just Dial is coming out with an IPO which opens for subscription by investors today (May 20, 2013). The company has fixed the price band as Rs. 470 to Rs. 543 for a face value of Rs. 10 per share. The issue is an offer for sale by 9 shareholders and the proceeds of this issue will not go to the company.
The offer at the top end of price band will garner a whopping Rs. 950 crores and all that will go only to the selling shareholders that include promoters V S S Mani, Ramani Iyer and V Krishnan apart from the funds like Sequoia III, SAIF, Tiger Global Foud JD Holdings, Tiger Global Five Indian Holdings and others.
The lead managers for the issue are Citigroup Global & Morgan Stanley.
Why Investors shouldn't apply for this IPO?
- The company has made a bonus issue of 55:1 in 2010
- The average price for Sequoia is arund Rs. 50.
- The investors want a return of 10 times without fundamentals justifying the same.
- Many transactions between Sequoia and promoters.
- Promoters holding cost is less than a Rupee.
- Sequoia pumps in Rs. 251 crores to shore company's networth in March 2012.
- US operations demerged and owned by promoters and Sequoia.
- Valuations at 50 P.E and over 9 times book value.
- Safety Net is the only comfort for investors.
- Investors will do better to remember Suzlon & SKS Microfinance's IPOs.
- Buy back of promoter's shares at Rs. 2500 few years back.