SIS Ltd. Buyback: Snapshot
|BuyBack Size- Shares||1,818,181|
|Buy Back Price||550|
|BuyBack Size- Rs. Cr||100.00|
|% Buyback /equity||1.23%|
|MP befo BM||426|
|% Premium on MP||29.11%|
|Record Date||aft Postal Ballot|
|Shares reserved- Retail||272,727|
SIS Ltd. Buyback: Updates
- RD after Postal Ballot
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SIS Ltd. Buyback: Broad Estimates
Cross Tabulation of Estimated Returns: SIS Ltd. Buyback
This framework to estimate the % acceptance of shares tendered in the buyback is broadly based on
1) Estimate of number of existing investors with value of holding <= 2 Lacs
2) Estimate of Purchase of shares by arbitrage investors.
Based on above, the estimates for the Buyback are:
Entitlement ratio : around 10 – 15%
Acceptance ratio: around 20-25% ( Any increase in share price prior to close of buyback will increase these ratios and vice versa)
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 and stock prices are affected by a plethora of factors including financial results, changes in internal and external business environment, market sentiment and more so after end of buyback. We have depicted estimated Absolute Returns in table form as a function of various possible combinations of Acceptance Ratios and Price Post Buyback.
|Absolute Returns %|
|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
Buyback of Shares: A Primer for Retail Investors
About SIS Ltd. (Security & Intelligence Services) :
- SIS (Security & Intelligence Services) Group Enterprise operates as a security firm in India, Australia and New Zealand.
- It was set up in 1985 by Ravindra Kishore Sinha and is one of the largest manpower security firms in the Indo-Pacific region with sales in excess of ₹8,500 crore.
- Security & Intelligence Serv.(India) is directly and indirectly engaged in rendering security and related services consisting of manned guarding, training, and indirectly engaged in paramedic and emergency response services; loss prevention, asset protection and mobile patrols; facility management services consisting of cleaning, housekeeping and pest control management services in the areas of facility management; cash logistics services consisting of cash-in-transit, ATM cash replenishment activities and secure transportation of precious items and bullion; and alarm monitoring and response services consisting of trading and installation of electronic security devices and systems through its subsidiaries, joint ventures and associates.
- Within India, SISL is present across 29 states through its network of 332 branches and 20 regional offices. SISL believes having its branches in proximity to customers’ premises is a key factor in customer retention and satisfaction.
SIS Ltd. Buyback: Stock Price Trend:
Assessment: SIS Ltd. Buyback
- This is the first buyback from the company.
- SIS reported Positive Financial performance in the Dec-20 quarter. Revenue for the period of Q3 FY21 stood at Rs.2,357.5 cr , up by 8.2% YoY . Consolidated EBITDA for Q3 FY21 stood at Rs. 146.9 crs, up by 10%YoY. due to better execution and better service mix. Net income grew by 44.2% YoY and stood at Rs. 99 cr. Security
- In the quarter while Services in India showed decline of 2.1% YoY (recovery on QoQ basis), International Security services stood at Rs. 1,189 crs, a growth of 11.4%
- SIS has been maintaining a good dividend payout of ~30%
- SISL is a leading player in the security services and facility management segment as well as in cash logistics not ony in India but also in its key overseas market of Australia too.
- Group revenues have been growing at a CAGR of 25% over FY17-FY20, supported by healthy organic growth and acquisitions.
- SIS Ltd. has a healthy revenue mix with contribution from mature markets (Australia, New Zealand and Singapore; 44% of group revenue) and growing markets (India; security services 41% and facility management 15%).
- SIS with good services mix and multiple long term contracts spread across verticals and geographies is in a position to deliver stable results.
- Due to good performance of some recent buybacks, SIS Ltd. Buyback could attract arbitrage investors at the last days.
- Attractiveness from Arbitrage Angle: Moderate, I intend to participate in the Sis Ltd. Buyback. One should not expect returns like large IT buybacks.
- SIS Ltd. is not in F&O. Thus arbitrage investors cannot hedge their positions & is thus prone to risks in case of a downturn in the market.
- Time Frame – about 3-3.5 months from BM held on 15-02-21
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.