SQS India BFSI had informed on 28-01-19 that the meeting of the Board of Directors of the Company is scheduled on 31-01-19 ,inter alia, to consider and approve to consider the proposal for buyback of the fully paid-up equity shares of the Company. SQS India Buyback ( SQS India BFSI Buyback) as approved in its board Meeting on 31-01-19, entails a buyback not exceeding 4,60,896 (Four lakhs Sixty thousand Eight hundred and Ninety Six) at a price of up to Rs. 550 for an aggregate amount not exceeding INR 25,34,92,800/ . SQS India BFSI Buyback is approximately 4.3% of the total paid-up share capital of the Company and is on a proportionate basis under “Tender Offer route”.
SQS India BFSI Buyback 2018
The details of SQS India BFSI buyback are given in the table below.
|MP on the day||440.0|
|Buy Back Price||550|
|MP befo BM||468|
|% Premium on MP||17.52%|
|BuyBack Size- Rs. Cr||25.35|
|BuyBack Size- Shares||460,896|
|Tot No.of shares||10,710,381|
|Equity Capital- cr||11|
|FV of Share in Rs.||10|
|MP as on RD|
|Buy Back Issue date||Yet to Happen|
|Shares reserved- Retail||69,134|
|Shareholders on RD|
|Shares on RD||Yet to Happen|
|Buyback Entitlement||Yet to Happen|
|Shares Tendered||Yet to Happen|
|Tendering ratio||Yet to Happen|
|Retail response||Yet to Happen|
|Aceeptance %||Yet to Happen|
SQS India BFSI Buyback: Estimate of Acceptance Ratio:
This framework is based on estimation of shareholding of SQS India BFSI shareholders who hold around 500 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.
Based on approximations indicated above, the entitlement ratio for SQS India BFSI Buyback is not expected to be in single digits. Considering an av. tendering ratio, under normal circumstances SQS India BFSI Buyback could have an acceptance ratio in 10-15% depending on how much new arbitrage investors buy into the stock.
Estimated Returns for SQS India BFSI 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|
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 SQS India BFSI
- SQS India BFSI Limited is a leading Business Assurance and Testing Specialist focusing exclusively on the Financial Sector.
- SQS India BFSI has a successful track record of over 15 years, and more than 14 million person hours of Testing, the company has served 150 plus customers in APAC, USA, UK and Middle East.
- SQS India BFSI Limited helps clients reduce software product life cycle costs and develop ‘business ready software’ within compressed timelines, through intense domain focus, structured software testing methodologies, offshore delivery, and test automation expertise. The company also has the distinction of maintaining high standards in execution, coverage, quality and confidentiality.
- Its financial software testing services have helped system integrators and product development companies to achieve near defect-free rollouts of software products such as PRIME, TS2®, VisionPLUS®, Oracle FLEXCUBE®, T24, Equation, [email protected], CS Eximbills, FinnOne™, Kondor+, Pan Credit, TS2, Siebel, Newton, Kastle, Genius, Premia, MIDAS, ClarityQ and Finacle.
- The company is ISO 9001:2015 and ISO 27001:2013 certified, both its Chennai Test centers are SSAE 16/ISAE 3402 compliant and one of the centers is PCI:DSS compliant.
SQS India BFSI : Price Trend, Summary of Financials
|Market Cap in Rs. Cr||501.06|
|Revenue FY18 in cr||295|
|CMP in Rs.||467.7|
|Price / Earning (PE)||13.30|
|Price / BV||4.01|
|Dividend Yield||5.13 %|
|Sales 3 yr CAGR||8.88 %|
|Debt / Equity Ratio||0|
Assessment: SQS India BFSI Buyback
- SQS India BFSI reported Flat performance for Q3FY19
- SQS India BFSI has dividend yield of about 4.2%
- In Q2Fy19 SQS India BFSI had reported excellent profit with its ROCE jumping to record 45%.
- SQS India BFSI Limited is part of the SQS Group, the world’s leading specialist in software quality.
- SQS India BFSI is virtually debt free
- Though Buyback price is attractive,average results from SQS India BFSI in Q2FY19 coupled with a small issue size may result in low acceptance ratio. SQS India BFSI , though being a good company may not be of much interest to arbitrage traders .
- SQS India BFSI is a small cap share prone to greater volatility post the buyback offer. On +ve side , it is not expensive.
- These are my estimates only and please do your own diligence in this matter as even what may appear as totally safe arbitrage investments in stock markets have inherent risks.
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.