BSE Limited has informed the Exchange on 2-05-17 regarding ‘Board Meeting scheduled to be held on Tuesday, May 7, 2019 to consider dividend, buyback for equity shares and Audited Financial Results (Standalone and Consolidated) of the Company for financial year ended March 31, 2019. BSE Limited Buyback as approved by the board on 07-05-19 comprises proposal to buyback 67,64,705 Equity Shares at the Buyback Offer Price of Rs. 680/- aggregating to Rs. 460 crore. BSE Limited Buyback represents 13.06% of the total paid-up equity capital of the Company), and is on a proportionate basis under “Tender Offer” route.
BSE Limited Buyback represents 24.73% of the aggregate of the total paid-up capital and free reserves of the Company based on the standalone audited financial statements of the Company as at March 31, 2019 . BSE Limited has recommended Final Dividend of 25 per equity share.
BSE Buyback : Key Info
|MP befo BM||635.3|
|Buy Back Price||680|
|% Premium on MP||7.04%|
|MP after BM||616|
|BuyBack Size- Rs. Cr||460|
|BuyBack Size- Shares||6,764,705|
|Tot No.of shares||53,305,252|
|Equity Capital- cr||10.66|
|FV of Share in Rs.||2|
|Buy Back Issue date|
|Shares reserved- Retail||1,014,706|
|Shares on RD|
BSE Buyback 2019 : Acceptance Ratio Possibilities
This framework is based on estimation of shareholding of BSE Limited shareholders who hold around 300 number of shares. To this we have added estimates/approximations for
1) Few additional purchase of Shares by existing shareholders with eye on earning additional returns through buyback.
2) Purchase of Shares by Arbitrage investors.
Based on assumptions indicated above and considering a moderate tendering ratio, under normal circumstances BSE Limited Buyback Bould have acceptance ratio of 15-25%, a figure that will depend to a good extent on new arbitrage investors who buy into the stock and price fluctuation in the stock as an uptrend in stock many times is used by arbitrage investors to exit even before the buyback.
Return Scenarios: BSE Limited Buyback
The absolute returns (Profit/Loss) that may accrue to an Investors/Arbitrage trader are a function of his entry price, Acceptance Ratio and Price Post Buyback. Investors may kept in mind that stock markets are quite volatile at this juncture and there are many political and other uncertainties due to elections. We have depicted some scenarios for Absolute Returns in a table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.
|MP Aft Buybk|
About Bse Limited
- The Bombay Stock Exchange(BSE) was established in 1875 and was Asia’s first stock exchange.
- BSE is the world’s 10th largest stock exchange.
- BSE provides a transparent market for trading in equity, debt instruments, derivatives and mutual funds.
- Stock Exchange activity and Depository are the two main activities of the Exchange. BSE is engaged in facilitating trading of securities and the activities incidental there to, and Depository activity provides depository-related services.
- BSE also has a platform for trading in equities of small and medium enterprises (SME).
- BSE also provides various services to capital market participants, including risk management, clearing, settlement, market data services and education. The Company’s subsidiaries include Marketplace Technologies Private Limited, Central Depository Services (India) Limited (CDSL), Indian Clearing Corporation Limited (ICCL) and CDSL Ventures Limited. The Company offers the SCORES system, which is a Web based system where investors can lodge their complaints online.
- BSE partially divested its stake to 24% from 50.05% in Central Depository Services (India) Limited (“CDSL”), an erstwhile subsidiary company, on June, 2017
Bse Limited: Price Trend, Summary of Financials
|Market Cap- Rs. Cr||3,274|
|CMP in Rs.||614.85|
|Revenue FY18 – cr||11.26|
|Equity Share Capital||10.65|
|Price / Earning (PE)||15.07|
|Price / BV||1.08|
|Dividend Yield||6.02 %|
|Sales 3 yr CAGR||3.51%|
|Debt / Equity Ratio||0|
|52 week High/Low||881.00 / 534.65|
BSE Ltd: Top Ten ShareHolders
|sno||Name of Shareholder||% Holding|
|1||Deutsche Boerse AG||4.78|
|2||State Bank of India||4.78|
|4||IDFC Mutual Fund||2.66|
|7||Caldwell India Holdings||2.2|
|8||Acacia Banyan Partners Ltd.||1.89|
|9||National Westminster Bank PLC||1.61|
|10||Bajaj Holdings and|
Assessment: BSE Buyback
- BSE is India’s second-largest stock exchange and stands to benefit from growth of the mutual fund industry and growing equity market participation.
- Initiatives like Indian International Exchange (INX) and commodity trading could propel revenue growth in future Trading on INX has seen continuous uptick.
- BSE business results in considerable cash surplus without any significant capital investments.
- Last year, BSE went for a buyback of Rs 166 crore worth of shares over 6 months through an open offer.
- BSE Limited has been paying liberal dividends. In FY 18 it was Rs. 36 and dividend is Rs. 30 in this year.
- BSE Limited Company is virtually debt free.
- Stock is trading at 1.12 times its book value.
- Stock is providing a good dividend yield.
- The Buyback process is expected to take about 3 months. The record date for determining eligibility for the final dividend (rs. 25) is June 28,2019.
- BSE buyback price was below market expectations and coupled with a flat performance in Q4FY19, the stock declined after the buyback announcement. In last year Buyback also BSE Limited disappointed investors with an open offer and the stock witnessed a a correction after Buyback announcment.
- Depending on the price movements, I may participate in the BSE buyback to a limited extent as when there is some price correction.
- In short term BSE Limited share price may be influenced heavily by the election outcome due in next 2 weeks.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering and Management . Iam also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2). This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/ Buy Back/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.