Frontline Securities Ltd has informed that a meeting of the Board of Directors of the Company will be held on March 26, 2019, inter alia, to consider proposal of Buy-Back of the Equity shares of the Company. Frontline Securities Buyback as approved by its Board comprises Buy back of up to 18,90,027 Equity Shares of Rs. 5/_ each. at a price of Rs. 40/-
(Rupees Forty Only) per equity share aggregating to an amount
not exceeding Rs. 7,56,01,0801 . Front line Securities Buyback represents approximately 15.94 % of the total paid-up equity capital of the Company and is on a proportionate basis under “Tender Offer” route.
Frontline Securities Buyback: Key Info
|MP befo announcement||33.5||31.5|
|MP after above|
|MP befo BM||29|
|MP after BM||29|
|Buy Back Price||165||150||32.5|
|% Premium on MP||#VALUE!||#VALUE!||12.07%|
|BuyBack Size- Rs. Cr||108.9||99||7.72|
|BuyBack Size- Shares||6,600,000||6,600,000||2375000|
|Tot No.of shares||228,438,327||235,028,327||9504850|
|Equity Capital- cr||22.84||23.50||0.95|
|FV of Share in Rs.||1||1||1|
|Buy Back Issue date||12-03:23-03-18||16-01:29-01-14|
|MP 1 day befo end dt|
|Shares reserved- Retail||990,000||990,000||356,250|
|Shareholders on RD||103,510|
|Shares on RD||Yet to Happen||24,363,332||643042|
|Buyback Entitlement||Yet to Happen||4.06%||55.40%|
|Shares Tendered||Yet to Happen||9898972||36616|
|Tendering ratio||Yet to Happen||40.63%||5.69%|
|Retail response||Yet to Happen||999.90%||10.28%|
|Aceeptance %||Yet to Happen||10.00%||100.00%|
Frontline Securities Buyback : Acceptance Ratio Possibilities:
This framework is based on estimation of shareholding of Frontline Securities shareholders who hold around 5000 number of shares. To this we have added estimates 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.
3) Data from Previous Buybacks
Based on approximations indicated above and considering a moderate tendering ratio, under normal circumstances Frontline Securities Buyback could have acceptance ratio of more than 50%. This is only a very rough estimate and not a recommendation.
Return Scenarios: Frontline Securities Buyback
The absolute returns/Loss that may accrue to an Investors/Arbitrage trader are a function of Percentage 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 related to international markets. 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|
This post is purely for informative and educational purpose and is in no way suggestive of taking any position in the counter. Profit or Loss in any buy sell operation in stocks is associated with significant risk of capital loss. For more on Buyback Benefits and other issues please refer the earlier Posts.
About Frontline Securities
- Frontline Securities Limited is a public limited company incorporated on May 05, 1994
- The registered office of the Company is situated at New Delhi while the company’s corporate office is located at Noida.
- The Company is operating in service industry and is currently engaged in the business of providing financial services to help clients to plan and execute their investment needs based on their risk-return requirements.
- The Company is engaged in providing Mutual Fund Distribution Services and is registered with AMFI and provides other services like Wealth Management, Corporate Advisory, Tax Planning, Mergers and Acquisitions, Life Insurance and associated services.
Frontline Securities: Price Trend, Summary of Financials
|Market Cap in Rs. Cr||6|
|Revenue FY18 in cr||1,160|
|CMP in Rs.||39|
|Price / Earning (PE)||7.06|
|Price / BV||0.95|
|Sales 3 yr CAGR||25.41%|
|Debt / Equity Ratio||0|
|52 week High/Low||45.60 / 24.75|
|Market Cap in Rs. Cr||1,552|
|Revenue FY18 in cr||1,160|
|CMP in Rs.||659|
|Price / Earning (PE)||17.94|
|Price / BV||3.14|
|Sales 3 yr CAGR||4.27%|
|Debt / Equity Ratio||1.19|
|52 week High/Low||705.00 / 495.00|
Assessment: Frontline Securities Buyback
- Company is virtually debt free.
- Stock is trading at 0.95 times its book value.
- Promoter’s stake has increased.Company has good consistent profit growth of 21.32% over 5 years
- Company is very small and a lot depends on promoter actions.
- It is difficult o comment on quality of company’s management given minuscule operations.
- Even small interest of arbitrage investors and sale by other stake holders can change the acceptance ratio considerably. If this is not the case, the acceptance ratio should be more than 50% or even still higher.
Standard disclaimer: I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk. Further the data in the post is prone to errors.