Indian Energy Exchange Ltd, IEX had informed on 13-12-18 that the meeting of the Board of Directors of the Company is scheduled on 20/12/2018 ,inter alia, to consider and approve to consider the proposal for buyback of the fully paid-up equity shares of the Company. IEX Buyback as approved by its Board of Directors on 20th December, 2018 comprises Buyback of its equity shares of Re. 1 each not exceeding 3,729,729 (Thirty Seven Lakhs Twenty Nine Thousand Seven Hundred Twenty Nine) equity shares of the Company at a maximum price of Rs. 185/- (Rupees One Hundred Eighty Five only) per equity share payable in cash aggregating to the total consideration not exceeding Rs. 69,00,00,000/- (Rupees Sixty Nine Crores only). IEX buyback represents approximately 1.23% of the total paid-up share capital of the Company and is on a proportionate basis under “Tender Offer” route.
IEX Buyback 2018
The details of IEX buyback are given in the table below.
|MP on the day||158|
|Buy Back Price||185|
|MP befo BM||166|
|MP after BM|
|% Premium on MP||11.78%|
|BuyBack Size- Rs. Cr||69|
|BuyBack Size- Shares||3,729,729|
|Equity Capital- cr||30.33|
|Tot No.of shares||303,286,240|
|FV of Share in Rs.||1|
|MP as on RD|
|Buy Back Issue date||Yet to Happen|
|MP on the day||Yet to Happen|
|Shares reserved- Retail||559,459|
|Shareholders on RD|
|Shares on RD||Yet to Happen|
|Buyback Entitlement||Yet to Happen|
|No. Shareholders who bid||Yet to Happen|
|Shares Tendered||Yet to Happen|
|Tendering ratio||Yet to Happen|
|Retail response||Yet to Happen|
|Aceeptance||Yet to Happen|
IEX Buyback: Estimate of Acceptance Ratio:
This framework is based on estimation of shareholding of IEX shareholders who hold around 1200 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.
Based on approximations indicated above, the entitlement ratio forIEX Buyback is expected to be quite low. Considering a av. tendering ratio, under normal circumstances IEX buyback Buyback could have an acceptance ratio of 8-15% depending on how much new arbitrage investors buy into the stock.
Estimated Returns for IEX 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 estimated Absolute Returns in a table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.
|Price when posted||162.00|
|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.
- INDIAN ENERGY EXCHANGE LIMITED (IEX) is India’s premier power trading platform
and has a market share of 97 percent.
- IEX provides an automated platform for physical delivery of electricity, IEX enables efficient price discovery and offers participants the opportunity to trade in a variety of energy products.
- IEX platform increases the accessibility and transparency of the power market in India and enhances the speed and efficiency of trade execution.
- Th product segments in wihci EX operates includes Day -Ahead Market (DAM), Term-Ahead Market (TAM), Renewable Energy Certificates (REC) and Energy Saving Certificates (ESCerts)
- IEX has more than 6200 participants registered on the exchange and these are located across utilities from 29 States, 5 Union Territories (UTs). Over 4,500 registered participants were eligible to trade electricity contracts and over 4,100 registered participants were eligible to trade RECs, as of March 2018. Out of participants registered to trade electricity contacts include 54 distribution companies, over 480 electricity generators and over 4,000 open access consumers.
IEX: Price Trend, Summary of Financials
|Market Cap (in ₹ Cr.)||4,989.00|
|Price To Earnings (P/E) Ratio||32.78|
|EBIT Margin (%)||86.88|
|PAT Margin (%)||57.14|
|Total Debt to Equity (D/E) Ratio||0|
IEX Dividend History
26/04/2018 Dividend Rs. 22/- (220%)
Assessment: IEX Buyback
- IEX had raised Rs 10 billion through initial public offer (IPO) at a price of Rs 165 (adjusted to stock split from Rs 10 to Re 1)..
- Despite a fair performance, IEX which listed in oct, 2017 the stock has under performed the market by a fall of 4% compared to 11% rise in Sensex.
- IEX has a good return on equity (ROE) and high profit margins.
- IEX is debt free.
- IEX is in a business that may not need any major capital expenditure required to scale up the business
- Company has been maintaining a healthy dividend payout of 70% +.
- I could be biased but in my view IEX is a company with decent performance since inception and good prospects. Purely based on issue size it is a bit of disappointment.
- Due to relatively lower Buyback, acceptance ratio in buyback may be quite low. Thus the IEX buyback offer may not be very attractive based on these assumption. How it is to be noted that IEX has good prospects and it Market price could improve based on its performance.
- These are my estimates only and please do your own diligence in this matter as even what may appear as totally safe arbitrage investments in stock markets have inherent risks.
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.