Why Just Dial shares have crashed 21pc in 6 days

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Just-DialThe shares of Just Dial have lost over a fifth of its value in just six sessions, underperforming the broader markets. Bollywood superstar Amitabh Bachchan, who has nearly 0.09 per cent stake in Just Dial or 62,794 shares, saw the value of his holdings lose over by over Rs. 2.2 crore in just six trading days.

At its day’s low, Just Dial shares fell as much as 10.3 per cent, extending its selloff to 20.7 per cent since closing at Rs. 1,693.25 on January 22.

The selling pressure in Just Dial shares intensified after the company reported its quarterly numbers on Monday. Its October-December quarter earnings fell short of some analysts’ expectations.

The company’s net profit for the quarter was at Rs. 29.55 crore, almost flat from Rs. 28.66 crore in the previous quarter. In addition to a slowdown in profit growth, Just Dial’s revenue growth has been also easing. For the nine months of the current fiscal, the search engine provider’s revenue growth slowed to 27 per cent vs 38 per cent in FY13.

This has led to the Street downgrading Just Dial earnings estimates. The Citigroup has cut the stock to neutral with target of Rs. 1,350, citing high valuation of 50 times its earnings.

Just Dial’s company’s management on its part has attributed ‘seasonality’ to the sequential drop in usage trends.

Despite the current selloff, Just Dial has been one of the very few IPO success stories of recent times where investors have netted handsome returns. Just Dial had listed in June last year, with retail investors issued shares at Rs. 530 in the IPO.

For Amitabh Bachchan the gains have been even sweeter. According to a disclosure by the company in its IPO prospectus, Mr Bachchan was allotted 62,794 shares at a price of Rs. 10 each in 2011, valuing his original investment at just Rs. 6.27 lakh. His holdings are now valued at Rs. 8.4 crore.

Just Dial shares today ended 7.2 per cent lower at Rs1,386.