Shares of Just Dial Limited have bounced back gaining over 4.5 per cent on the BSE after the company clarified that its proposal to seek shareholders' nod to raise funds amounting up to Rs 1,000 crore was only an enabling resolution and it did not intend to "hoard cash".
The stock came under sustained selling pressure yesterday losing nearly 6 per cent on the BSE after the company notified the exchanges about its plans to get shareholders' approval to raise funds. But the announcement by JDL, which offers local search related services through multiple platforms within the country, appeared to have calmed the nerves of the investors.
In a clarification issued to the stock exchanges on its proposal to seek shareholders' approval through postal ballot to raise money up to Rs 1,000 crore, JDL said that the company's IPO last year was a 1OO per cent "offer for sale and no fresh issue of equity shares was undertaken by us". The company did not raise any money through the lPO.
JDL said that its business had "continued to generate cash" and its cash balance has gone up since the IPO to nearly Rs 740 crore (including investments) as of September 30, 2014. The company said that its board had passed an "enabling capital raising resolution" to ensure that JDL was prepared "in the event a suitable opportunity arises" for it to pursue any strategic objectives. The company said that as of now, it had not indentified any such suitable opportunity requiring it to raise capital and said "we do not intend to hoard cash". The company said that it would "act upon this enabling resolution" only if it identified a suitable opportunity for pursuing strategic initiatives that needed capital "over and above the funds currently available with us".
The clarification appeared to have calmed the investors' sentiments with the stock gaining Rs 61.90 or 4.54 per cent to Rs 1425 on the BSE. The stock has been under performing in the past few weeks after touching a 52 week high of Rs 1,894.70 on Aug 5 on the exchange. Since then it is down by about 25 per cent.