The board of R Systems International is scheduled to meet on 15-01-19 to consider a proposal for buyback of equity shares. R Systems Buyback as approved by its Board comprises Buyback of upto 3,690,000 (Thirty Six Lakhs Ninety Thousand) fully paid-up Equity Shares of Re. 1/- each of the Company at a price of Rs. 65/- (Rupees Sixty Five only) payable in cash for an aggregate consideration not exceeding Rs. 239,850,000 (Rupees Twenty Three Crores Ninety Eight Lakhs Fifty Thousand only). R Systems Buyback represents approximately 2.98% of the total paid-up equity capital of the Company and is on a proportionate basis under “Tender Offer” route. R Systems International had earlier bought shares worth ₹19.50 crore at ₹65 a share in 2016.
R Systems Buyback 2018 & 2016
|MP on the day||47.0|
|Buy Back Price||65||65|
|MP befo BM||53|
|MP after BM||54|
|% Premium on MP||22.64%|
|BuyBack Size- Rs. Cr||23.99||19.5|
|BuyBack Size- Shares||3,690,000||3,000,000|
|Equity Capital- cr||12.40||12.69|
|Tot No.of shares||123,990,425||126,870,425|
|Indiv. Shr holding (< 2L nom)||11,339,805|
|% of total equity||9.15%|
|FV of Share in Rs.||1||1|
|Result postal Ballot|
|MP as on RD||57.25|
|Buy Back Issue date||Yet to Happen||7-11:21-11-16|
|Shares reserved- Retail||553,500||450,000|
|Shareholders on RD||14,233|
|Shares on RD||Yet to Happen||6,028,983|
|Buyback Entitlement||Yet to Happen||7.46%|
|Shares Tendered||Yet to Happen||496,074|
|Tendering ratio||Yet to Happen||8.23%|
|Retail response||Yet to Happen||110.24%|
|Aceeptance %||Yet to Happen||90.71%|
R Systems Buyback: Estimate of Acceptance Ratio:
This framework is based on estimation of shareholding of R systems shareholders who hold around 4000 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 earlier Buyback
Based on approximations indicated above, the entitlement ratio for R Systems Buyback is expected to be less than 10%. Considering a moderate tendering ratio, under normal circumstances R Systems Buyback could have acceptance ratio of 10-20%, a figure that can go up if less number of shareholders chose to tender their shares.
Estimated Returns for R Systems 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.
|MP Aft Buybk|
R Systems Buyback price has been reasonable and is at a good premium to existing market price. 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 R Systems International
- R Systems International was incorporated in 1993 as a software consulting firm in the United States.
- R Systems International started India operations in 1997, by setting up our offshore software development center in Noida.
- It is a software product development and BPO services company. It helps companies bring products and services to market quicker by using its proprietary pSuite execution framework. Customers can choose services specific to their needs from R Systems iPLM suite of services.
- R Systems list of customers include a variety of Fortune 1000, government and mid–sized organizations across a wide range of industry verticals including banking and finance, government, healthcare, high technology and independent software vendors.
- R Systems has five large Centres for Software Excellence. This includes a center in El Dorado Hills, CA, Singapore and three centres in India at Pune, Chennai and Noida).
R Systems : Price Trend, Summary of Financials
Market Cap (in ₹ Cr.)
|CMP in Rs.||53|
|Face Value (Rs.)||1|
|Price To Earnings P/E||20.1|
|BV per share (₹)||22.66|
|Price To Books (P/B) Ratio||2.34|
|Debt to Equity (D/E) Ratio||0.01|
Assessment: R Systems Buyback
- R systems reported good set of numbers in Q3Fy19 with both significant jump in Revenues as well as profitability.
- Post amalgamation promoter stake in the company has increased
- R systems is virtually Debt free.
- R Systems Buyback is not attractive to an arbitrage investor as entitlement ratio is likely to be less and it is difficult to take a call on very low tendering ratio at this point of time. More clarity would have emerged on R Systems Buyback if the results of company were also declared along with buyback.
- R Systems Buyback is not in F&O which may keep stock under pressure post buyback.
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.