NIIT Ltd Buyback: Snapshot

TypeTender
BuyBack Size- Shares9,875,000
Buy Back Price240
BuyBack Size- Rs. Cr237.00
% Buyback /equity6.97%
Board meet24-12-20
MP before BM201
% Premium on MP19.40%
Record DatePostal Ballot
Shares reserved- Retail1,481,250
NIIT Ltd Buyback: Updates
  • RD after Postal Ballot

See List of all Buybacks

NIIT Ltd Buyback 2020 and 2019 : Info
NIIT Buyback
Buyback '20
Buyback '19
TypeTenderTender
BuyBack Size- Shares9,875,00026,800,000
Buy Back Price240125
BuyBack Size- Rs. Cr237.00335.00
% Buyback /equity6.97%15.99%
Board meet24-12-2010-08-19
MP befo BM20197.8
% Premium on MP19.40%27.81%
Record DatePostal Ballot18-10-19
Shares reserved- Retail 1,481,2504,020,000
Announcement 21-12-2002-08-19
MP befo announcement172.589.4
MP aft announcement 94
Tot No.of shares 141,756,608167,601,735
FV of Share in Rs.22
Equity Capital- cr28.3533.52
postal ballot date12-01:10-02-2104-09:03-10-19
Buy Back Issue date25-11:6-12-19
Shares on RD 18,437,260
Buyback Entitlement21.80%
Shares Tendered 6,303,824
Tendering ratio34.19%
Retail response156.81%
Aceeptance %63.77%
NIIT Ltd Buyback: Broad Estimates

Cross Tabulation of Estimated Returns: NIIT Ltd Buyback

This framework to estimate the % acceptance of shares tendered in the buyback is broadly based on
1) Estimate of number of existing investors with value of holding <= 2 Lacs
2) Estimate of few additional Shares purchased by existing shareholders with eye on earning additional returns through buyback.
3) Purchase of shares by arbitrage investors.
4) Data from earlier Buyback.

Based on above, the estimates for the Buyback are:
Entitlement ratio : around 6- 10%
Acceptance ratio: around 12-20%
( Any increase in share price prior to close of buyback will increase these ratios and vice versa)

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 ans stock price are affected by a plethora of factors including financial results, changes in internal and external business environment, market sentiment and more so after end of buyback. We have depicted  estimated Absolute Returns in table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.

Shares Bought
800
Nos.
Buyback Price240
Price (Live)190
Investment (Rs.)152280
Absolute Returns %
MP Aft Buybk
Acceptance %170185200
10%-7.01%0.08%7.17%
15%-5.17%1.52%8.22%
20%-3.34%2.97%9.27%

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 NIIT Ltd:
  • Established in 1981, NIIT Limited, a global leader in Skills and Talent Development, offers multi-disciplinary learning management and training delivery solutions to corporations, institutions, and individuals in over 40 countries. The company provides managed training services including custom content development and curriculum design, learning administration, learning delivery, strategic sourcing, and learning technology.
  • NIIT Ltd. serves geographical segments which include India, America, Europe and Asia Pacific.
  • Its lines of business include Corporate Learning Group (CLG), Skills and Careers Group (SNC), and School Learning Group (SLG).
    • CLG offers managed training services, custom curriculum design and content development, learning administration, learning delivery, strategic sourcing, learning technology and advisory services.
    • SNC delivers learning and talent development programs in areas of banking, finance and insurance, soft skills, management education, multi-sectorial vocational skills, digital media marketing and new-age information technology (IT).
    • SLG provides teaching and learning solutions to schools. SLG offerings include Quick School, Math Lab and IT Wizard programs.

NIIT Ltd Buyback: Stock Price Trend:

Assessment: NIIT Limited Buyback

  • NIIT Ltd. had earlier completed divestment of NIIT Technologies to private equity firm Baring Private equity Asia through its affiliate Hulst B.V. for a consideration of INR 20,204 Mn and the company being flush with cash, came up with a buyback in 2019.
  • NIIT completed buyback of 26.8 million shares during FY20.
  • NIIT Ltd has been maintaining a good dividend payout.
  • Promoter stake has been low but it is reassuring to see increase in promoter stake from 31.5% in FY20 to the current levels if 34.3%
  • Q2FY20 Results were stable
    • Revenue at INR 2,189 Mn; was up 8% QoQ and down 6% YoY
    • • EBITDA at INR 344 Mn vs INR 243 Mn in Q1 FY21; up 41% QoQ and up 18% YoY
    • • EBITDA % at 16%; up 367 bps QoQ and up 322 bps YoY
    • • PAT at INR 260 Mn; PAT margin at 12%
  • NIIT has experienced promoters like Vijay K. Thadani who is the Vice Chairman & Managing Director of NIIT Lt and co-founder of NIIT Group. P Rajendran, Joint Managing Director of NIIT Ltd., is also a well known name in IT sector.
  • Foray into Digital Learning can be a growth driver for the company.
  • NIIT Ltd is not in F&O.
  • Due to good performance of some recent buybacks, NIIT Ltd Buyback could attract arbitrage investors at the last moment.
  • Attractiveness from Arbitrage Angle: Mild, I may add the stock on dips. One should keep expectations low due to good run up in share price in last one year and an expected low Entitlement ratio for Buyback.
  • A good Q3FY21 show by NIIT Ltd can shore up the returns.
  • Time Frame – about 2-2.5 months from start of this year

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.