Just Dial Files For An IPO To Fund Expansion Plans

Mumbai’s Just Dial plans to go down the IPO path and has filed documents with SEBI. It seeks to raise Rs 360 crore through sale of fresh shares and some more via sale of shares by private equity (PE) investors. PE companies such as SAIF Partners (21.58 per cent), Sequoia (12.73 per cent) and Tiger Global (21.84 per cent) own large stakes and the promoter VSS Mani and his family hold 42.79 per cent stake. Citigroup Global Markets India and Morgan Stanley India are the lead bankers. Amitabh Bachchan also holds a small 0.12 per cent, as part of his proceeds as brand ambassador.

The company plans to use the proceeds from the IPO for brand-building (Rs 101 crore over three years), setting up offices in various parts of the country (Rs 51-odd crore) and for upgrading and procuring computers (Rs 99 crore).

The Business Model

Just Dial provides both B2C and B2B listings across multiple platforms. It boasted 6 million listings till June 2011. Its B2B model involves local businesses paying for listings which are featured in their search results (known as campaigns) on a priority basis. The number of campaigns stands at 120,200 as of March 31, 2011. However, customers do not have to pay to access these listings.

The Service

Just Dial’s contact no (2888 8888) is a convenient number in the market, although it has been slightly sullied when we had to prefix ‘2’ all of a sudden. You normally get through in 2 rings, and once you call them for the first time, they record your name. You are greeted with a no-nonsense welcome, the operators jump straight to the point, and the details are messaged and e-mailed to you. They do sneak in a tiny rating survey about the request you last made, but you have an option to turn it down.

You normally get 3 or 4 options once you request for details, and more often than not, the listed company calls you first. We really think whatever plaudits they receive are not enough.

A Fair Investment?

Just Dial’s consolidated total income stood at Rs 189.91 crore in FY11, representing a CAGR of 39.4 per cent. Its profits after tax increased from Rs 1.64 crore in FY07 to Rs 28.62 crore in FY11. In FY 2011, the company addressed over 180 million search queries from millions of users across platforms. For the year ended March, Just Dial reported a profit after tax of Rs 28.6 crore, up from last year’s Rs 18.4 crore.

Yesterday, we wondered whether investors are getting carried away by e-sand castles and today, we see an established name looking to further their ambitions by raising funds in the open market. Looking at the considerable amount of success they have seen in Mumbai, it is only natural that Just Dial spreads its wings into the hinterland and builds on the tremendous amount of goodwill they have generated.

However, larger operations require patience to knit everything together, and the management should be wary of diluting the quality of service too much. A bigger presence can only mean greater footfalls, and considering the simplicity and past success of their business plan, our only suggestion would be, Go forth and Multiply!

 How often do you use Mobile Search Services? Is your entity listed with Just Dial? Your comments

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