Jupiter Infomedia Listed On The Bourses: Exit
DSIJ Intelligence / 16 Aug 2012
Jupiter Infomedia’s shares got listed on the BSE SME platform on August 16, 2012. The fixed price issue of 20.40 lakh shares at the issue price of Rs 20 per share and a face value of Rs 10 per share intended to raise Rs 4.08 crore in order to finance the rent/purchase of five new offices and hire a staff of 60. We had covered the new issue analysis of Jupiter Infomedia in depth in our magazine ‘Dalal Street Investment Journal’ (Volume XXVII, No. 17 dated August 12, 2012) in which we had asked investors to stay away from investing in the scrip.
The key reasons for our ‘avoid’ rating for the company with business operations that include an online B2B portal (www.jimtrade.com), an India-centric encyclopaedia (www.indianetzone.com) and an online yellow pages directory (www.jimyellowpages.com) were:
- High dependence on revenue from Google AdSense with income earned from this source in the range of 78-89 per cent in the last three years.
- Limitations in increasing the reach of the product leading to the high possibility of the company failing to command a premium on listings.
- The portal www.jimtrade.com being far behind competitors like www.indiamart.com and www.alibaba.in and having nothing different to offer to leverage their standing.
- Non-impressive revenue growth over the last five years and alternate years of positive and negative YoY growth for profit before tax.
- Uncanny transactions in favour of promoters as ‘refundable deposit for offices’ to the extent of Rs 1.59 crore, leading to a bloated net worth and causing the EPS to be Rs 0.085 and the PE to be 235.81x.
The shares of Jupiter Infomedia have been trading higher today in the range of Rs 21.60 to Rs 22.10 per share which is 8 to 10 per cent higher. We maintain out negative outlook on the scrip due to the lacklustre past performance and the highly questionable possibility of the company being able to take the path of sustainable growth. For those who have invested in the scrip, we recommend them to book profit and exit the scrip at the current level.
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