Just Dial hits four-month low

Since March 13, the stock has tanked 32% from Rs 1,616 to Rs 1,110 after NSE included it in the F&O segment.

Just Dial has dipped 6% to Rs 1,110, extending its 9% decline in the past three trading sessions on the National Stock Exchange (NSE). The stock opened at Rs 1,185 and hit a low of Rs 1,090, its lowest level since December 10, 2013. A combined 773,000 shares have changed hands on the counter so far on the NSE and BSE.

Just Dial is under tremendous selling pressure, eroding nearly one-third of its market capitalization after the NSE included it in the futures and options (F&O) segment from March 13.  The stock has declined 32% from Rs 1,616 on March 12. It had touched a record high of Rs 1,774 in January this year.

Centrum Broking has downgraded Just Dial to Sell, with a target price of Rs 1275, and believes its entry into the transaction-driven business model does not warrant much optimism in the near term, given that the company will need to invest heavily in A&P (advertising and promotion).

The stock is very expensive, trading at a PE of 49x and EV/Sales of 12.6x for FY16E respectively, and hence we downgrade it to Sell and look for better entry points, the analyst at Centrum Broking said in a report dated April 2, 2014.