The estimated acceptance ratio as per calculations turns out
reasonable at 60 percent, which makes buyback attractive.
Rudra Shares & Stock Brokers
Quick Heal Technologies has approved buyback of 63,63,636
fully paid up equity shares of face value Rs 10 each representing up to 9.02
percent of the total paid up equity share capital. The buyback is fixed at a
price of Rs 275 per equity share for an aggregate amount of up to Rs 175 crores
via tender offer.
The record date for the said
purpose is April 26, 2019. One will have to buy its shares up to April 24 to
participate in the buyback as ex-date is fixed as April 25. Quick Heal is
buying back its shares at a premium of 24 percent on the current price of Rs
222.
We have estimated entitlement
ratio would be 36 percent-40 percent. However, real acceptance ratio should be
higher around 40-50 percent as many shareholders do not take part in buyback.
So, we have estimated the acceptance ratio to be around 55 percent-60 percent.
We have estimated maximum tenure for completion as 2 months.
Buyback as a percent of equity shares is already high at 9.02
percent, above that, promoter shareholding in the company is also steep at
72.32 percent. Hence, the acceptance ratio could be 55-60 percent.
We advise that traders can
buy 800 shares at CMP of Rs 222 in the open market and participate in the
tender offer. Also, one has to monitor that shareholders holding value should
be less than the amount of Rs 2 lakh as on the record date to qualify for this
buyback.
As per SEBI regulations, 15
percent of the offer size will be reserved for retail shareholders (holding
amount less than Rs 2 lakh). Therefore, Rs 26.25 crore (15 percent of Rs 175
crore) is set for retail investors.
The estimated acceptance
ratio as per calculations turns out to be reasonable at 60 percent, which makes
buyback attractive.
We are anticipating upside in
Quick Heal as mid & smallcaps stocks have started to gain traction now.
As upside in Quick Heal is
possibly quite high, the probability of high alpha is also expected. Hence, if
the stock rises even by more than 10 percent, the expected return may turn out
from 15 percent-18 percent.
Besides, in adverse case
scenario, as there is a big political event lined up for the next month, if the
stock moves in the opposite direction up to 20 percent, one may still get
expected return to the levels of 5-7 percent.
Downside expectations being
low, investors may go for buyback and the remaining quantity (not been accepted
in buyback) may be sold in the open market.
Source: https://www. moneycontrol.com/news/business/stocks/investors-can-participate-in-quick-heal-technologies-buyback-expect-upside-3856601.html
Source: https://www. moneycontrol.com/news/business/stocks/investors-can-participate-in-quick-heal-technologies-buyback-expect-upside-3856601.html
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