BSE Limited Buyback Offer 2019

(i) BSE (formerly Bombay Stock Exchange) established in 1875, is Asia’s first & the world’s fastest Stock Exchange with a speed of 6 microseconds. BSE is India’s leading exchange group and has played a prominent role in developing the Indian capital market. BSE is a corporatized and demutualized entity, with a broad shareholder base that includes the leading global exchange- Deutsche Bourse, as a strategic partner. BSE provides an efficient and transparent market for trading in equity, debt instruments, equity derivatives, currency derivatives, interest rate derivatives, mutual funds and stock lending and borrowing.

(ii) BSE also has a dedicated platform for trading in equities of small and medium enterprises (SMEs) that has been highly successful. BSE provides a host of other services to capital market participants including risk management, clearing, settlement, market data services and education. It has a global reach with customers around the world and a nation-wide presence. BSE’s systems and processes are designed to safeguard market integrity, drive the growth of the Indian capital market and stimulate innovation and competition across all market segments.

(iii) Indian Clearing Corporation Limited, a wholly owned subsidiary of BSE, acts as the central counterparty to all trades executed on the BSE trading platform and provides full novation, guaranteeing the settlement of all bonafide trades executed. BSE Institute Ltd, another fully owned subsidiary of BSE runs one of the most respected capital market educational institutes in the country. Central Depository Services Ltd. (CDSL), associate company of BSE, is one of the two Depositories in India.

Buy Back Offer Deal:

Buyback Type: Tender Offer
Buyback Record Date: Jul 29 2019
Buyback Offer Amount: ₹ 460 Cr
Date of Board Meeting approving the proposal: May 07 2019
Date of Public Announcement: May 07 2019
Buyback Offer Size: 13.61%
Buyback Number of Shares: 67,64,705
Price Type: Tender Offer
FV: 2
Buyback Price: ₹ 680 Per Equity Share

Details of Buyback:

(i) BSE proposes to buy back it's fully paid up equity shares of Rs 2 each at Rs 680 per equity share through tender offer route, subject to the passing of a special resolution by the shareholders of the Company. (ii) The total amount of buyback size would be a maximum of Rs 460 crore.   The Company proposes to buyback 67,64,705 Equity Shares at the Buyback Offer Price (representing 13.06% of the total paid-up equity capital of the Company). (iii) The Buyback offer size represents 24.73% of the aggregate of the total paid up capital and free reserves of the Company based on the standalone audited financial statements of the Company as of March 31, 2019. (iv) The Board has recommended payment of a dividend of Rs. 25 per equity share of the face value of Rs. 2 each. The proposal is subject to the approval of shareholders at the ensuing fourteenth Annual General Meeting scheduled to be held on July 15, 2019. The record date for determining eligibility for the final dividend is June 28, 2019, and the payment will be made on or before August 13, 2019. 

Salient financial parameters:

Particulars(Cr) Q4 FY19 Q3 FY19 QoQ Growth
Revenue from Operations 115.69 104.68 ↑11%
Less : Operating Expenses 113.31 109.23  ↑4%
Operating EBIDTA 2.38 (-)4.55
Add : Non-operational Revenue 66.39 72.43   ↓8%
Less : Non-operating expenses 17.35 19.77  ↓12%
Profit before exceptional items 51.42 48.11    ↑7%
Less : Exceptional Costs 3.88 3.17   ↑22%
Add : Share of Profit of Associates 8.74 6.98   ↑25%
Less : Taxes 4.42 1.85   ↑139%
Net Profit 51.86 50.07    ↑4%
Net Profit Margin 28% 28%
(i) For the financial year 2018-19, the Consolidated Net Profit is Rs 199.28 crore which was 217 Cr last year. (ii) The operating EBITDA was Rs 16.62 crore as per consolidated results and Rs 25.32 crore as per standalone results. (iii) The Consolidated EPS for FY18-19 stands at 38. The P/E stands at 16 at CMP of 636.

How to Participate in buyback?

1. Firstly to be eligible for the buyback the investor should have shares of BSE Limited Buyback Offer 2019 in demat or physical form as on record date. [ 29.07.2019 ]. 2. Once you have shares in demat, you can participate in the buyback process which is opening from [ Not Announced Yet ] by selling your shares through your broker on NSE or BSE. 3. Then on [ Not Announced Yet ], the payment will be given to you for accepted shares and unaccepted shares will be returned to your demat account.

Profit from the buyback on the bases of acceptance Ratio:

Buy 294 Shares at CMP of Rs. 636 [2,00,000/680 =294)
Acceptance Ratio 33% 50% 75% 100%
Amount Invested in Buyback 1,86,984 1,86,984 1,86,984 1,86,984
No. of Shares buyback 97 147 220 294
BuyBack Profit 4268 6468 9680 12936
Profit 2.22% 3.44% 5.1% 7%

Recommendation:

Review and Recommendation of BSE Limited Buyback Offer 2019 by IZ team is: 4/10 Fair:1-5 Good:5-7 Excellent: 7-10

    Don’t jump in bse.

    1-1 share wali startegy pe Chalo.

    Market condition is very poor.

      can you please elaborate about what you meant by “1-1 share wali startegy” .Please do so urgently.

    what will be expected acceptance ratio in bse buy back, please share. At current price can we buy bse shares?

    what is the record date of buyback?
    please share some news market wizard sir.

        i am new for buyback.
        kindly want expert advice.
        if i purchase 1 share of any company before record date so i am eligible for buyback
        now i gave that 1 share in tender offer in buyback and suppose AR is 20% only.
        so company will accept my that 1 share? or they will reject it.
        if Acceptance ratio is so less so in that case company have to accept 1 share from all eligible accounts or not?

    It is informed that 29.07.2019 is record date for eligibility of buyback of BSE shares but doesn’t find such news in media, please confirm.

    Will this buyback be affected by the new tax introduced on buybacks in the budget? IS there a chance that the board will cancel buyback and instead opt for dividend to avoid high tax outgo?

      We just need to wait for management decision.

    The buyback price is lower than the IPO price. Why should it pay buyback tax?

    As record date is not announced, 100% possibility of BSE cancelling the buyback. Wait for good dividend announcement in the next board meet.

    I was lucky to sell 200 shares at 615 few days back and not waiting for buyback record date.

    Experts any advise on BSE ? 13.61% size is a big number. Also they have announced a dividend of 30/- per share.

    Do you think below 600 is a good price to enter in this script ?

    How many shares in retail quata under Rs.200000 as per Last share holding data?

    Is it good idea to buy at current rate of 596 to participate in the buy back – pls advise

    Can we now buy BSE or wait for further fall due to fall in broader markets? I want to buy and participate in Buyback and Dividend so that any further fall in price after buyback can be cushioned a bit.

      There is no hurry dividend ex date is 28 June and buyback would be considered in AGM on 15 July 2019. The record date would be then in last week of July. If panic sets in on results day or post results we can have better prices much lower than 600.

    I think entitlement ln retail is always equal or more than general. It is never less than general.

    Kindly advise if in buyback participating in Retail category or Genery category will be beneficial..

    See the case of Balrampur Chini, the buyback size was 3.69%

    Entitlement based on Record date

    Reserved Category for Small Shareholders = 5 Equity Shares out of every 62 Equity Shares
    (8.0%)

    General Category for all other Eligible Shareholders = 3 Equity Shares out of every 89 Equity Shares
    (3.37%)

    There is an upside of 7.86% from Current Market Price. If we add the dividend of Rs. 25, then it becomes 11.7% .

    Total Shares reserved for Retail Shareholders are ~10 Lakh.

    As per Annual Report of 2017-18 no. of Individuals holding nominal share capital up to 1 Lakh are ~1.27 Cr.

    So Entitlement based on that would be 8%.

      How can entitlement be ever less than 13.61%. Can you enlighten us?

        13.61% is the total entitlement. Out of this 15% is reserved for retail.

        Case 1:

        Let us suppose 100 Cr shares are outstanding as on 31.03.2019 in the company.
        (i) Promoters & Others = 90 Cr Shares
        (ii) Individuals( Retail and HNIs) holding nominal share capital up to 1 Lakh is = 10 Cr Shares

        Company is doing a buyback of 15% i.e 15 Cr Shares. Out of this 15 Cr, only 2.25 Cr are reserved for Retail.

        Entitlement for Retail would be = 2.25/10= 22.5%. However, as 10 Cr shares held up with both Retail and HNIs so the final figure would be more than 22.5% for sure.

        Entitlement for General Category would be = 12.75/90= 14.1%.

        Case 2:

        Let us suppose 100 Cr shares are outstanding as on 31.03.2019 in the company.
        (i) Promoters & Others = 40 Cr Shares
        (ii) Individuals( Retail and HNIs) holding nominal share capital up to 1 Lakh is = 60 Cr Shares

        Company is doing a buyback of 15%(Buyback Size) i.e 15 Cr Shares. Out of this 15 Cr, only 2.25 Cr are reserved for Retail.

        Entitlement for Retail would be = 2.25/60= 3.75%. However, as 60 Cr shares held up with both Retail and HNIs so the final figure would be more than 3.75% for sure.

        Entitlement for General Category would be = 12.75/40= 31.875%

        So you can see how entitlement may be higher and lower in Retail and General Category depending upon the difference in percentage between the two.

        I do calculation only for retail. Please see if my calculation is correct.

          What if promoter will not take part? I think in this they willnot take part for only such minor return
          Mark my words ar will definitely more than 50 pc because of this dividend gem.

            There is no Promoter of BSE. Promoter holding in BSE is a big zero 0.
            Obviously promoter cannot take part in this buyback. BSE is a professionally run company.

          entitlement can’t be lower than 13.61% for retail in any circumstances.

            Will check my facts Pankaj Jii and revert. Thanks for pointing out the error.

          Min. 15% of buyback size is reserved for retail. Retail Quota is determined on a two part criteria. Retail quota can be higher than 15% but for that to happen their holding on record date should be greater than 15%.

          Which implies Retail Entitlement cannot be less than buyback size in any scenario which is 13.6%.

          See the extract from Today’s Balrampur Chini Page 35. There are two Criteria involved:

          In furtherance to Regulation 6 of the SEBI Buyback Regulations, the reservation for the Small Shareholders (Reserved Category), will be higher of:

          (i) 15% of the number of Equity Shares which the Company proposes to Buyback, which works out to 12,65,749 (Twelve Lakhs Sixty Five Thousand Seven Hundred Forty Nine Only) Equity Shares; or

          (ii) number of Equity Shares as per their entitlement as on the Record Date (i.e., 1,56,87,777 / 22,84,38,327 × 84,38,327), which works out to 5,79,494 Equity Shares. All the outstanding Equity Shares have been used for computing the Buyback Entitlement of Small Shareholders since the promoters and members of the promoter group also intend to participate in the Buyback.

            Will check my facts Gaurav Jii and revert. Thanks for pointing out the error.

    BB price is only 7%up, results is bad, dividend 30rs. Stock price should be goes low in short term..

      Yes, results are not as per expectation. Accumulate below 620 for buyback