Shares of the internet search firm Just Dial jumped as much as 10 per cent on Thursday on top of yesterday’s 19 per cent gain. Including today’s gains, the stock has surged over 30 per cent in last two sessions.
Gains in Just Dial shares follow an announcement of a buyback offer by the company. Under this buyback, the company will spend Rs 164.5 crore to buy back up to 1.06 million equity shares – or 1.5 per cent of its equity base – at a price of Rs 1,550 per equity share.
The buyback window will remain open from February 25, 2016 to March 10, 2016. Shareholders having Just Dial shares in their demat account as on December 4, 2015 are eligible to tender shares under this buyback offer.
Share buybacks help boost investor sentiment, indicating the management’s confidence in their own business.
Some traders also said Just Dial shares remained in an oversold territory after its recent selloff. In last one year, Just Dial shares have corrected 60 per cent on concerns over high valuation, weakening growth and sliding profitability against nearly 20 per cent fall in the broader Sensex.
Analysts say the buyback offer can bring only temporary relief to Just Dial shares. “The current upmove (in Just Dial shares) is on account of short covering and the trend remains down. Once the short covering rally gets over, the stock can fall to Rs 400,” Ruchit Jain, equity technical analyst at Angel Broking told NDTV Profit.
Just Dial shares closed 4.95 per cent higher at Rs 551.8 apiece compared to 1.14 per cent gain in the broader Sensex.