Sasken Technologies Ltd has informed the stock exchanges that the meeting of the Board of Directors of the Company is scheduled on 23/04/2019 ,inter alia, to consider and approve the results, dividend and Buy-back of fully paid-up equity shares of the Company, quantum and mode of Buy-back. Sasken Buyback as approved by the board on 23-04-19 comprises proposal to Buy-back up to 19,98,678 fully paid up Equity Shares of the Company having face value of Rs.10 each at a price not exceeding Rs.850 per Equity Share for a total consideration not exceeding Rs.169.89 crore.
Sasken Buyback represents approximately 11.68% of the total paid-up Equity Share Capital of the Company and is on a proportionate basis under “Tender Offer” route. 1.68% of the total paid-up Equity Share Capital of the Company and is on a proportionate basis under “Tender Offer” route. Sasken Buyback amounts to about 25.00% of the total paid-up equity capital and free reserves (including securities premium account) as per the audited financial statements of the Company for the financial year ended 2018.
- Acceptance ratio ~ 60-61%
- Issue 11-10 :25-10-19
- Entitlement 24.85%
- Sasken Buyback RD 05-07-19
- Sasken Buyback price reduced from Rs. 850 to 825. No. of shares increased. Overall buyback size same.
Sasken Buyback 2019, 2017 : Key Info
|MP befo announcement||660||405.25|
|MP after above||690.3|
|MP befo BM||707||431|
|Buy Back Price||825||410|
|% Premium on MP||16.69%||-4.87%|
|MP after BM||414.4|
|BuyBack Size- Rs. Cr||169.89||117.63|
|BuyBack Size- Shares||2,059,243||2869098|
|Tot No.of shares||17,110,114||17719813|
|Equity Capital- cr||17.11||17.72|
|FV of Share in Rs.||10||10|
|Buy Back Issue date||03-02:16-02-18|
|Shares reserved- Retail||308,886||430,365|
|Shares on RD||1242972||1860795|
Sasken Buyback 2019 : Acceptance Ratio Possibilities
This framework is based on estimation of shareholding of Sasken Technologies shareholders who hold around 300 number of shares. To this we have added estimates/approximations 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 assumptions indicated above and considering a moderate tendering ratio, under normal circumstances Sasken Technologies Buyback could have acceptance ratio of 15-30%, a figure that will depend to a good extent on new arbitrage investors who buy into the stock and price fluctuation in the stock as an uptrend in stock many times is used by arbitrage investors to exit even before the buyback.
Return Scenarios: Sasken Buyback
The absolute returns (Profit/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 due to elections. 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|
About Sasken Technologies
- Sasken Technologies is one of the leading players in providing Product Engineering and Digital Transformation services to global tier-1 customers.
- Sasken’s domain knowledge and comprehensive suite of services have helped global leaders maintain market leadership in industries such as Semiconductors, Automotive, Enterprise grade Devices, Smart Devices and Wearables, Industrials, Retail, Public Safety, Satcom, and Telecom. Global Fortune 500 and Tier 1 companies in these segments are part of Sasken’s customer profile.
- Sasken is a specialist in Product Engineering and Digital Transformation providing concept to- market, chip-to-cognition R&D services to global leaders in Semiconductor, Automotive, Industrials, Smart Devices & Wearables, Enterprise Grade Devices, SatCom, and Transportation industries. For over 30 years and with multiple patents, Sasken has transformed the businesses of over a 100 Fortune 500 companies, powering over a billion devices through its services and IP.
- Company has five wholly owned subsidiaries which have been set-up primarily to cater to key customers worldwide, in areas such as hardware and software design; development and testing of wireless devices; product and solution design, etc.
- In addition to being directly involved in the development of a variety of technologies, the Company has been a member of premier technology bodies including ITU, 3GPP, GCF, MPEG-ISO, WiMAX, NFC, Open Handset Alliance, DLNA and ATM and other forums. The Company`s solutions are backed by CMMI-DEV-V1.3-ML3, ISO 9001:2008, ISO 27001:2005 and TL 9000 certifications.
- Recently, Sasken launched a state-of-the-art Automotive Center of Excellence (CoE) in Detroit, USA. The center’s main focus is to develop cutting-edge solutions for the next generation of connected vehicles in areas such as Advanced Driver Assistance System (ADAS), Integrated Cockpit System (ICS), In-car Infotainment, and Telematics.
Sasken Technologies : Price Trend, Summary of Financials
|Market Cap- Rs. Cr||1,188|
|Revenue FY18 – cr||503|
|CMP in Rs.||693.4|
|Price / Earning (PE)||13.36|
|Price / BV||1.82|
|Sales 3 yr CAGR||5.53%|
|Debt / Equity Ratio||0|
Assessment: Sasken Buyback
- Sasken is a Technology Driven company with decent record.
- Sasken is virtually debt free. Its cash reserves are in excess of Rs. 500 crore.
- Sasken Technologies has dividend payout of ~ 20.8% . This may have gone up this year.
- Sasken Technologies reported average Financial performance in Dec-18 quarter.
- Consolidated Revenues for Q3 FY 19 at Rs.121.41 Crore were up 7.4 % sequentially over the previous quarter but down 7.9 % YoY from Q3 FY 18. Consolidated EBIDTA stood at Rs.12.65 Crore, down 5.0 % sequentially over the previous quarter and down 22.8 % YoY from Q3 FY 18. PAT at Rs.18.07 Crore was up 7.0 % sequentially o& down 11.3 % YoY. Consolidated EPS was at Rs.10.58 for the quarter.
- Sasken reported good results for Q4Fy19 and declared a total dividend of Rs. 12.5 (125%) for Fy 18-19 against a dividend of Rs 7.5 (75%) in FY18-19
|Total Income ( Rs. Cr)||146.33||130.5||138.51|
|Net Profit (Rs. Cr)||27.45||18.07||25.98|
- Sasken Technologies received assessment order from the IT department under section 143(3) of the Income Tax Act, 1961 with a Rs 68 crore has been raised as a tax demand. The company stated that they are in the process of filing an appeal against the said order.
- Sasken has been rated in the Leadership Zone for Semiconductor vertical for the fourth time in a row by Zinnov. Sasken is delivering cutting-edge solutions in Telematics, In-Car Infotainment, Digital Cluster, V2X, and ADAS to customers in the Automotive domain. Sasken being ranked in the leadership zone for the Automotive category,
- In the earlier Sasken Buyback, the company announced a buyback price which was below investors expectations. This time the company has been generous.
- Depending on the price movements, I may participate in the Sasken buyback. However it is felt that larger Buybacks like Wipro offer more safety to investors due to their sheer size, low volatility being a large cap and prsence in F&O.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering and Management . Iam also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2). This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/ Buy Back/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.