Smartlink Holdings Ltd has informed Exchanges that the meeting of the Board of Directors of the Company is scheduled on 14/06/2019 to consider and approve the proposal for buyback of fully paid up equity shares of face value of Rs.2/- . Smartlink Buyback approved by its Board comprises proposal to buyback 42,00,000 Equity Shares at a price not exceeding Rs. 130/- (Rupees One Thirty only) per Equity Share for an aggregate amount not exceeding Rs. 54.6 crore. The Smartlink Buyback is approximately 24.78% of the total paid-up equity capital of the Company and is on a proportionate basis under “Tender Offer” route.
- Entitlement 25.03%
- Issue opens 18-10 : 01-11-19
Smartlink Buyback : Key Info
|MP after this||96||106.95|
|MP befo BM||97||103.65|
|Buy Back Price||130||120|
|% Premium on MP||58.54%||33.93%|
|MP after BM||108.3|
|BuyBack Size Rs. Cr||54.6||67.2|
|BuyBack Size- Shrs||4200000||5,600,000|
|Tot No.of shares||16,950,000||22550000|
|Equity Capital- cr||3.39||4.51|
|FV of Share in Rs.||2||2|
|Shares - Retail||630,000||840,000|
|Buy Back Issue date||18-10:01-11-19||03-06:26-3-18|
|shrholders on RD||11,015||13,506|
|Shares on RD||2516896||2,966,652|
Smartlink Buyback : Acceptance Ratio Estimate
This framework is based on estimation of shareholding of Smartlink shareholders who hold around 1500 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 & feedback from past buybacks in year 2018 and 2016.
Based on approximations indicated above and considering a moderate tendering ratio, under normal circumstances Smartlink Buyback could have acceptance ratio of 35-60%, a figure that will depend significantly on price movement of the stock in coming days & tendering ratio.
Estimated Returns: Smartlink Buyback
|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.
About Smartlink Holdings Limited
- The Company was incorporated in 1993 and the registered office of the Company is located at Goa.
- The name of the Company has been changed from Smartlink Network Systems Limited to Smartlink Holdings Limited in April, 2018.
- The Holding Company is in the business of Investment of funds in Mutual Funds and other Investments and investments in its subsidiary Companies.
- The Company has received the Certificate of Registration to carry on the business of non –banking financial institution without accepting public deposits from Reserve Bank of India dated May 2, 2018.
- The Company has 3 Subsidiaries namely 1. Digisol Systems Limited, 2. Synegra EMS Limited and 3. Telesmart SCS Limited.
- The Group is in the business of developing, manufacturing, marketing, distributing and servicing of networking products and Structured Cabling products.
- It has its manufacturing facility for the manufacturing of networking and SCS products at Verna, Goa.
- The group offers range of products for various communication needs including Switching, Broadband Routing, Wireless LAN and Surveillance.
Smartlink Holdings: Price Trend, Summary of Financials
|Market Cap- Rs. Cr||184|
|CMP in Rs.||109|
|Revenue last yr||97.2|
|Equity Share Capital||3.39|
|Price / Earning (PE)||NA|
|Price / BV||0.75|
|Debt / Equity Ratio||0.08|
|52 week High/Low||107.00 / 68.10|
Assessment: Smartlink Buyback
- SmartLink has been frequently coming up with buybacks and the buyback price and acceptance ratio in the past two buybacks have been quite attractive for the investors.
- Promoter Holding in Smartlink Holding stands at 73.6%
- In last Smartlink buyback in Year 2018, the acceptance ration was 100%. This feat is now difficult to repeat as equity has reduced and so retail shares in line with total shares for buyback is less. However a strong movement in price towards buyback price could provide opportunity to many investors to exit and improve acceptance ratio.
- Smartlink is a holding company and earning are not very impressive. Its performance in FY19 was flat.
- I do not see much merit to enter smart link buyback at this stage and only a good drop in price will make it attractive. This is despite good acceptance ratio in both the buybacks in year 2016 and year 2018.
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.