Majesco Buyback as approved by its Board of directors on October 8, 2020 enatils a proposal to buyback upto 74,70,540 fully paid equity shares of Rs. 5/- each of the Company at a price of Rs. 845/- per Equity Share or an aggregate amount not exceeding Rs. 631,26,06,300/- . The buyback through the tender route amounts to 25% of the total paid-up equity capital of the Company as on September 30, 2020.
Majesco Buyback being more than 10%of the Paid Up Capital and free reserves of company will require shareholders approval and thus may take about 3 months time.
Majesco Buyback: Key Info
|MP before this||819.5|
|Buy Back Price||845|
|% Premium on MP||3.11%|
|BuyBack Size- Rs. Cr||631|
|BuyBack Size- Shares||7,470,540|
|Tot No.of shares||29,882,161|
|Equity Capital- cr||14.94|
|FV of Share in Rs.||5|
|Buy Back Issue date|
|Shares reserved- Retail||1,120,581|
|Retail Shr holders on RD|
|Shares on RD|
|Retail bidders (tendered)|
About Majesco & its US Sale.
- Majesco is positioned as a Visionary in Gartner 2019 Magic Quadrant for Life Insurance Policy Administration Systems.
- Majesco US was sold to a private equity, Thoma Bravo, LP at $13.1/share, valuing the company at $594 million (Rs 4,455 crore). This offer price was at a 77 per cent premium to Majesco US’ last close price. Majesco (US) offered software services and solutions to insurance companies and was valued at 4 times its FY20 sales. This sale of US subsidiary opened up a cash bonanza for Indian shareholders.which held a 74 per cent stake in the American subsidiary..
Majesco Buyback: Acceptance Ratio
Since Majesco share has crossed the Buyback price, there is not much to say here except that on any weekness one can enter the stock. The reasons for the share going up lie in the fact that Majesco due to sale described in earlier section will be having Cash ampunto to Rs. 1024 on its books even if the buyback takes place in its entireity.
Majesco : Price Trend
Assessment: Majesco Buyback
- Post the completion of sale of Majesco US, Majesco India has indicated that it has cash of Rs.3072 crore,
- This implies a value of Rs. 1028/share.
- Majesco plans to distribute the same via buyback and dividend.
- The company has announced a buyback of @ 845/share amounting to Rs. 631 crore.
- After deduction of post tax amount of buyback, The company plans to distribute remaining 2295 crore i.e. Rs. 1020 per share via dividends and aims to distribute the same by January 2021.
- Even as share price has crossed the buyback price, and mavalue for retail investors unless there is dip in price, HIgh networth shareholders with higher dividend tax incidence could stil tender the shares.
- In addition, the company also has real estate of ~1,20,000 square feet atNavi Mumbai. However, once it is sold, the amount will be distributed to shareholders.
- I would like to add Majesco shares in the event of any weakness in the market as the buyback process is expected to take 3 months time.
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.