On June 5, 2013, Just Dial (NSE: JUSTDIAL) made its debut on the Indian stock exchanges, surging 19% intraday. The stock listed on the exchange at Rs 590, and went on to hit a high of Rs 1779 in January the following year.
Investors rushed to pour money into the then-unstoppable stock which had leading Bollywood celebrity Amitabh Bachchan as the brand ambassador (and holder of 62,794 shares of the Company at a price of Rs 10). Ace investor Rakesh Jhunjhunwala also had a stake in the Company, which gave investors another reason to jump into the bullish bandwagon. But, Rakesh realized that all was not good with the Company and exited, others didn’t and paid heavily.
Just Dial stock has today hit a low of Rs 536 on huge volumes. It has already witnessed a massive depreciation of 37 percent in January alone, and there is no bottom in sight.
Just Dial Stock Specifications
The Company has a market cap of roughly Rs 4,000 crores. The price-to-earnings ratio is 26 while that of the industry is 39.31. The book value is 95.48, and the dividend yield is hardly worth considering at 0.35%.
Why is the stock crashing?
Investors were thoroughly disappointed with the Company’s Q3 results reported on Jan 28. The net profit for the quarter ended December stood at Rs 27 crore, the lowest in the past 5 quarters. Apart from this, the market punished the stock as the management failed to curtail the expenses which stood at Rs 142 crore, up 28% as compared to a year ago.
With no concrete information from the Company regarding the future actions, it is hard to tell what holds for the stock price.
But we can employ technical analysis to approximate the bottom for this stock.
Taking a look at the weekly Just Dial price chart taken from icharts.in, one can find a wide, downward sloping trading channel. Since the chart is based on closing prices, hence, if the stock closes below the lower range of the band on a weekly basis, investors can expect more pain in the coming sessions.
If bulls manage to put up a fight and protect this crucial level, which comes in at around Rs 590, a strong rebound cannot be ruled out. That would obviously be another opportunity to exit the counter or build short positions.
A couple of technical indicators, RSI and Money Flow Index, are signaling oversold conditions for the stock. The 14-week RSI at the end of last week stood at 29.607 while the 14-week MFI stood at 22.765.
RSI reading at or below 30 and MFI value at or below 20 suggest oversold conditions, and also a possible rebound.
There are currently no positives for Just Dial, except that a technical rebound may come in the next few sessions if the security gets seriously oversold.
Do not attempt to catch this falling knife, but rather, build short positions on rallies.