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Just Dial・s IPO  
Product Ref: 15/564C Company: Just Dial

Product Type: Case Industry: Software & Services

Related Product(s): Teaching Note
Just Dial was the largest phone and internet-based local search provider in India. The company started providing services in 1996, but the revenues of the company shot up in 2004 with the penetration of telecoms in the Indian market. Several private equity investors funded the growth of Just Dial. Almost 90% of Just Dial revenues came from Tier I cities in India. In order to mark its presence and expand its network to Tier II cities, Just Dial required funds. With funds already raised from private equity investors, Just Dial planned to take the IPO route for further fundraising. In March 2013, Just Dial・s IPO was approved by SEBI after five previous unsuccessful attempts - twice on NASDAQ, two aborted filings in India in the last two years and one on a smaller exchange. The case is positioned in May 2013, just a few days before the IPO・s launch, when there was a great deal of negative news in the market regarding Just Dial・s overvaluation. The business model was completely new and there were no industry comparables in order to do a fair valuation. Analysts in the market repeatedly warned investors, suggesting they avoid the IPO because it was overvalued. Furthermore, they said that it was only meant to provide an exit option for the private equity investors. Consequently, investors were sceptical of Just Dial・s valuation. With this negative perception prevailing in the market, should Just Dial consider delaying the IPO or lowering the price range (thus reconsidering its valuation)?
Functional Area : Finance & Investments

Learning Objective: 1. To understand the IPO process and associated concerns.
2. To introduce the technique of determining intrinsic value of a new venture.
3. To explore the challenges associated with valuing a new venture with no competitors and hence no comparables available for valuation.
4. To comprehend the perspectives of different parties in the IPO process- the company, promoters/venture capital investors, retail investors and market experts/analysts.
5. To provide students with a basic understanding of the IPO valuation process.
Length: 22 pages Country: India

Pub. Year: 2015 Level of Difficulty: 2
This product type is available in the following language(s):      English
Related Information: N/A
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