Just Dial spikes up trade after shareholders nod for Buy back

Just Dial shares spiked up more than 6% in trade today to hit an intra-day high of Rs.924.55 after the news of approval from shareholders to buy back shares upto a maximum of 25 per cent of total paid-up capital and free reserves through a tender offer.

Share Buy back essentially means the repurchase of outstanding shares by a company in order to reduce the number of shares traded on the market. Tender offer is an offer made by the company to the shareholders to acquire the shares from them at a fixed price. Usually the price offered is at a premium to attract the shareholders to offer their shares.

Buyback is a way by which a company invests in itself, which is indicative of the management and promoters continued faith in the future of the company. The intention is to reward investors, improve financial ratios (such as price to earnings, return on assets and return on equity), increase promoter holding, reduce public float and check the falling stock price, reduce volatility apart from building investor confidence.

Of late the company's stock too has under-performed on the benchmark indices which is indicative of the fact that it has corrected more then 40% YTD. From the highs of Rs 1597 touched in January it has seen a declining trend over the 11 month period to sub Rs 800 levels. This declining trend has seen the management come up with the buy back offer to arrest the fall and build shareholders confidence in the company and the business as whole.

Recently, Sameer Gehlaut, Chairman, India Bulls Housing Finance too increased his ownership stake in the company as the company tried to calm panicky investors, who shunned its shares on an acquisition bid last week as the shares tanked more then 18.5 % on the news of acquisition to touch a intra- day low of Rs 590. The crash in shares prices gave an opportunity to the management and promoters to up their stake in the company.

This buy has led to the increase in the stake of Sameer Gehlaut from 23.51% to 23.80%. The buy further instils the faith that the management & promoters have in the company which was reflected in the stock price of the company after it bounced back almost 10% from its low of Rs 590. Currently, the shares are trading at Rs 670.