Tanla solutions informed on 17-04-20 that the Board of Directors of the Company at its meeting to be held on 22-04-20 shall consider the proposal for Buy-back of shares. Tanla Solutions Buyback as approved by its Board entails a proposal to buyback of up to 1,90,12,345 Equity Shares at a price of INR 81/- (Indian Rupees Eighty one only) per Equity Sharefor an aggregate amount not exceeding INR 154,00,00,000/- (Indian Rupees One Hundred Fifty Four Crores Only). Tanla Buyback represents 12.49 %,of the total Equity Shares in the existing total paid-up equity share capital of the Company. Tanla Buyback is on a proportionate basis under “Tender Offer” route.
- Tanla solutions has intimated Wednesday, June 10, 2020 as the Record Date for the purpose of determining the entitlement and names of shareholders, who will be eligible to participate in the proposed Buyback.
- Tanla buyback issue 1-07 : 14-07-20
- Entitlement Ratio (ER) : 23.3%
About Tanla Solutions
- Tanla started its journey with a small group of mobile messaging experts, with base in Hyderabad with the aim to create a world-class messaging service.
- Tanla offers high-end, dependable and quality consumer commercial communication services to enterprises. Commercial communications comprise Short Message Services (SMS), voice, push notifications, e-mails, WhatsApp and Rich Content Services (RCS).
- This segment, regulated by the Telecom Regulatory Authority of India (TRAI), has been growing at an annual rate of 25% over the past few years
- Today, Tanla is a global player in its domain as one of the largest Cloud Communication providers, handling over 90 bn business communications annually.
- Tanla works on innovating the way the world communicates, through enhanced speed, ease and simplicity of Cloud Communication solutions, adopting cutting-edge technologies to meet the discerning needs of a diverse clientele, from enterprises to carriers across geographies.
Tanla Buyback : Key Info
Particular / Year
Buy Back 2020
|Buy Back first intimation||17-04-20|
|Market Price a day prior to this||54.7|
|Market Price a day after this||123|
|Buy Back BM||22-04-20|
|Buy Back Type||Tender Offer|
|Buy Back Price||81|
|Market Price on day of Board meeting for Buyback||60.25|
|Market Price a day after Buyback Board Meeting||66.4|
|% Premium on Market Price||34.44%|
|Buy Back Size in Rs. Crore||154.00|
|Buy Back Size ( Shares)||19,012,345|
|% Buyback of Equity||12.49%|
|Buyback shares for Retail||2,851,852|
|Equity Capital in crore||15.23|
|Face Value of Share in Rs.||1|
|Record Date||Oct 6 2020|
|Buy Back Issue date||1-07:14-07-20|
|Shares on RD||12,262,471|
Tanla Buyback Buyback : Acceptance Ratio Possibilities
This framework is based on estimation of number of Tanla solutions shareholders who hold around 3000 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.
Based on assumptions indicated above and considering a moderate tendering ratio, under normal circumstances Tanla Buyback could have Buyback Ratio of 15-25%. Acceptance ratio could vary depending on price trend exhibited by stock, % shares tendered and number of new arbitrage investors.
Return Scenarios: Tanla Buyback 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.
|Price when posted||67.0|
|MP Aft Buybk|
Tanla Buyback: Price Trend, Summary of Financials
|Market Cap- Rs. Cr||999|
|CMP in Rs.||68.45|
|Revenue – cr. (TTM)||1738.71|
|Net profit-cr (TTM)||-112.3|
|Equity Share Capital||14.59|
|Price / Earning (PE)|
|Price / BV||1.30|
|Sales 3 yr CAGR||32.50%|
|Debt / Equity Ratio||0.07|
|52 week H/L||89.35 / 37.10|
Assessment: Tanla Buyback
- The consumer commercial communication services in whoch anla operates is expected to show a heathy growth.
- The promters have increased stake in the company though it is still low at 35.21.
- Company gave a dividend of 35% i.e. Rs. 0.35 on a face value of Rs. 1 in Sept 2019.
- Company has almost no debt.
- Last year Tanla acquired Karix Mobile ( formerly mGage ) for 340 Crore in a cash and stock transaction from GSO Capital Partners, a Blackstone Company. Karix has been in news for new business developments like announcing partnership with WhatsApp for Business
- As a part of the above deal, Tanla solution made a preferential allotment to Banyan of 2.20 Crores Equity Shares in Tanla of Face Value of Re.1 only, at a rate of INR 56.79 per share totaling Rs.125 Crores and thus Banyan Investments Limited holds about 15% in Tanla.
- Tanla closed the acquisition of Gamooga Softtech Private Limited on October 24, 2019 for a purchase consideration of `48.5 Cr. The purchase consideration comprised of a cash payment of Rs. 31.5 Cr and allotment of 21,19,688 equity shares of Tanla of face value Rs. 1 /- to the erstwhile promoters of Gamooga, at a price of Rs. 80/- per equity share
- Tanla Solutions has come up with a blockchain-based solution ‘Trubloq’ which would address issues of trust, spam, security, fraud and data privacy.
- Tanla has been plauged by grave mis governanace issues in the past and there is no suerty that it has now started on a clean slate. The stock was once a fancy stock and from there it has destroyed considerable investoro wealth. Of late there has been some very moderate pullback.
- I intend to participate in Tanla Buyback with a small exposure even though the acceptance ratio is likely to moderate and returns will primarily depend on company’s results and market sentiment.
- This is primarily on expectation that company may do well in future.
Standard disclaimer: 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.