MPS Ltd. Buyback approved in its Board meeting on 11-08-20 entails buyback of fully paid up Equity Shares of face value of INR 10 ( each not exceeding 5,66,666 (Five Lacs Sixty-Six Thousand Six Hundred Sixty-Six only) Equity Shares at a price of INR 600
(Six Hundred rupees only) per Equity Share payable in cash for an aggregate amount not exceeding INR 34,00,00,000 (Indian Rupees Thirty Four Crores only). MPS Ltd. Buyback represents 3.04% of the total paid-up equity share capital of the Company as on March 31, 2020. The Board has fixed August, 24, 2020 as the Record Date for determining the entitlement and the names of the Eligible Shareholders to MPS Ltd. Buyback.

See List of all Forthcoming and Recent Buybacks

MPS Ltd. Buyback: Updates
  • issue date 16-9:29-09-20
  • Entitlement 1:12 or 8.3%
  • RD 24-Aug-20
MPS Ltd. Buyback 2020 : Info
Buyback
TypeTender
Announcement 04-08-20
MP befo BM396
Board meet11-08-20
Buy Back Price600
% Premium on MP51.52%
BuyBack Size- Rs. Cr33.99996
BuyBack Size- Shares566,666
Tot No.of shares18,616,926
% Buyback3.04%
Equity Capital- cr18.62
FV of Share in Rs.10
Record Date24-08-20
Buy Back Issue date16-9:29-09-20
Shares reserved- Retail 85,000
Shares on RD 1021753
Buyback Entitlement8.32%
Shares Tendered
Tendering ratio
Retail response
Aceeptance %
MPS Buyback: Broad Estimate of Aceeptance % range

1) Few additional purchase  of Shares by existing shareholders with eye on earning additional returns through buyback. 2) Purchase of  few shares by arbitrage investors.

Based on approximations indicated above, the entitlement ratio forMPS Ltd. Buyback is expected to be quite low. MPS Ltd. Buyback could have an acceptance ratio of ~5%.

Cross Tabulation of Estimated Returns: MPS Ltd. 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.

Shares Bought
400
Nos.
Buyback Price600
Price (Live)408
Investment (Rs.)163200
Absolute Returns %
MP Aft Buybk
Acceptance %360380400
5%-8.82%-4.17%0.49%
10%-5.88%-1.47%2.94%
15%-2.94%1.23%5.39%
20%0.00%3.92%7.84%

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
 Buyback of Shares: A Primer for Retail Investors

About MPS Ltd. :
  • MPS is a strategic partner to the world’s leading enterprises, publishers, learning companies, and content aggregators.
  • Over 2,600 associates power MPS across seven development centers in India, two subsidiaries and four offices in Europe, and six offices in the USA.
  • MPS provides platforms and services for content creation, full service production, and distribution to the worlds leading publishers, learning companies, corporate institutions, libraries, and content aggregators.
  • MPS was earlier Macmillan India Ltd and and the Delhi based ADI BPO purchased Macmillan’s stake in MPS in 2011, and holds a nearly 68% stake in it.
  • Other investors in MPS include Singapore sovereign wealth fund GIC, PineBridge Investments etc.
MPS Ltd. Buyback: Summary of Financials,  Stock Price Trend
Market Cap- Rs. Cr3,957
CMP in Rs.831
Revenue – cr. (TTM)1,275
Net profit-cr (TTM)178
Equity Share Capital9.52
Face Value2
EPS TTM37.39
Price / Earning (PE)22.23
Book Value148.74
Price / BV5.59
ROCE %23.37%
ROE  %17.36%
Sales 3 yr CAGR6.67%
Dividend Yield1.44%
Debt / Equity Ratio0.01
52 week  H/L Rs.   935.70 / 261.00

Assessment:MPS Ltd. Buyback

  • MPS Ltd. has delivered a poor growth of < 2% over past five years.
  • MPS Ltd. is virtually debt free.
  • MPS Ltd. is providing a good dividend yield of 6.33%.
  • MPS Company has been maintaining a healthy dividend payout of 90.49%.
  • Total Cash and Cash equivalents (including investment in Mutual funds) as on 30-Jun-2020 are INR 192 Crores and INR 181 Crores as on 31-Mar-20.
  • MPS reported stable results in Q1FY21
Rs. In LacsFY’21 Q1FY’20 Q1FY’20 Q4
Profit2,1322,1271,608
PBT 1,8922,1671,357
PAT1,3851,538943
EBITDA (%)25.90%25.10%20.80%
PBT (%)23.00%25.60%17.50%
PAT (%)16.80%18.20%12.20%
EPS7.448.265.07
  • MPS formery Macmillan India Ltd after its purchase by Delhi based ADI BPO group has done several acquistions. This includes and e-leraning company from Tata’s in 2018 and the lastest is independent scholarly publishing platform HighWire for $7.1 million (about Rs 53.63 crore).
  • From an arbitrage angle, at present rates and considering vey low acceptance ratio, MPS Ltd. Buyback may be a below average opportunity for  arbitrage investors.  The returns may however be supported by traction in the stock price which has been subdued for quite some time and MPS stock may get rerated due to the business segments it operates in.

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.